16 April 2026
SEBI's April 2026 amendment creates the 'inoperative fund' tag and cuts the Angel Fund investor threshold from two lakh to one thousand
What did the SEBI AIF (Amendment) Regulations, 2026 change?
Three things. In the third proviso to regulation 10(c), 'two lakh' was substituted with 'one thousand'. In regulation 29(7), distribution of proceeds after satisfying liabilities became subject to conditions the Board may specify. And a new regulation 29(10A) allows an AIF to be tagged as an inoperative fund in such manner and on such conditions as the Board specifies.
What changed
SEBI notified the Securities and Exchange Board of India (Alternative Investment Funds) (Amendment) Regulations, 2026 in Mumbai on 16 April 2026, under notification No. SEBI/LAD-NRO/GN/2026/303, signed by Amit Pradhan, Executive Director. They came into force on publication in the Official Gazette, which carried them as No. 277 of Part III, Section 4.
Three changes, and two of them are enabling provisions rather than rules.
The three changes
| Provision | What the amendment did |
|---|---|
| Third proviso to regulation 10(c) | "two lakh" substituted with "one thousand" |
| Regulation 29(7) | After "satisfying all liabilities", inserted ", subject to conditions as may be specified by the Board from time to time" |
| New regulation 29(10A) | "An Alternative Investment Fund may be tagged as an inoperative fund, in such manner and subject to conditions as may be specified by the Board from time to time." |
Why the last two matter more than they read
Neither the 29(7) insertion nor the new 29(10A) does anything on its own. Both create a power for SEBI to specify conditions later. Read on the day of notification, they are placeholders.
Two months later SEBI filled them. The circular of 16 June 2026 on guidelines for winding up of AIFs, retention of proceeds and 'Inoperative Fund' status is the specification these two provisions were drafted to permit. An amendment that looks like housekeeping in April is the legal footing for a substantive compliance regime in June — a pattern worth recognising, because it recurs. The Second Amendment of 10 July stands in the same relation to the GARUDA circular of 30 July.
The number change
The substitution of "two lakh" with "one thousand" in the third proviso to regulation 10(c) follows the revised regulatory framework for Angel Funds that SEBI issued by circular on 10 September 2025.
Who this reaches
On its own terms, nobody immediately. In practice, every AIF in or approaching its liquidation period, and every fund that has stopped operating without formally winding up — those are the funds the inoperative tag was built for.
What is not settled
The regulation defines neither "inoperative fund" nor the conditions for the tag, leaving both to be specified. The note to the notification records that the AIF Regulations were published on 21 May 2012 and were last amended on 19 November 2025 by the Third Amendment Regulations, 2025 vide No. SEBI/LAD-NRO/GN/2025/274.
Sources
- Securities and Exchange Board of India (Alternative Investment Funds) (Amendment) Regulations, 2026 — No. SEBI/LAD-NRO/GN/2026/303 — SEBI, 18 April 2026 · primary
- The Gazette of India, Extraordinary, Part III Section 4, No. 277, 16 April 2026 — CG-MH-E-18042026-271895 — Controller of Publications, Government of India, 16 April 2026 · primary
Dated 16 April 2026, last checked against source 25 August 2026. The dateline is the date of the instrument this item reports, not the date the page was written. This page reports what a document says. It is information, not legal, tax or investment advice, and it is not a recommendation about any fund.