30 June 2026
SEBI proposes a single 75% investor-consent threshold for AIFs and would replace 'associate' with 'related party' for conflicted transactions
What is SEBI proposing to change about AIF investor consent?
SEBI's consultation paper of 30 June 2026 makes eight proposals. AIFs would choose one of three consent methodologies and disclose it in the placement memorandum, apply it consistently to every investor in a scheme, and meet a single 75% threshold by value wherever consent is required. For conflicted transactions, 'associate' would be replaced by a new 'related party' definition.
What changed
SEBI issued a consultation paper on 30 June 2026 on two connected questions: how an AIF should obtain investor consent, and which transactions should require it. Eight proposals are on the table. Public comments closed on 21 July 2026. Nothing here is law yet — draft amendment text sits at Annexure D of the paper.
The problem SEBI describes
The AIF Regulations mandate investor consent for a range of material decisions, at thresholds of either two-thirds or three-quarters by value, and say nothing about how consent is to be obtained. SEBI's own words on the thresholds: there is "no principle based distinction or rationale" for requiring different ones.
That gap has produced divergent practice. SEBI records two industry complaints and one investor complaint:
- Non-response. Funds with large investor bases cannot reach the threshold because investors do not reply.
- Selective non-voting. Investors withhold responses "as a strategic tactic to leverage concessions" — SEBI names reduced fees and favourable co-investment terms as examples.
- Differential treatment. Some funds apply deemed consent to most investors while allowing others to insist on explicit approval, so the voting mechanism varies within a single scheme.
The eight proposals
| # | Proposal |
|---|---|
| 1 | AIFs may choose one of three methodologies: deemed consent, present and voting, or express voting |
| 2 | The chosen methodology, its policy, procedures and associated risks must be disclosed in the PPM, including communication mode, notice period, voting timeline and reminders — and applied consistently across every investor in a scheme |
| 3 | Every investor gets an opportunity to vote; the proposal, its rationale, the triggering provision, the threshold, and the treatment of non-response must all be disclosed when consent is sought |
| 4 | The manager is responsible for transparency, adherence to the policy and fair access, must answer investor queries in a reasonable time, and must keep records of all notices, reminders, meetings and votes |
| 5 | Existing schemes' methodologies are grandfathered; the policy applies prospectively |
| 6 | A single 75% unitholder threshold by value, wherever consent is required |
| 7 | A 'related party' definition inserted into the AIF Regulations, borrowed from Section 2(76) of the Companies Act, 2013 and modified for the AIF framework |
| 8 | 'associate' replaced with 'related party' in the conflict-of-interest provisions, while 'associate' stays where broader coverage is not warranted |
The three methodologies differ in the denominator, which is where the practical consequence sits. Deemed consent and express voting both measure votes in favour against the total value of the scheme; the difference is whether silence counts as a yes. Present and voting measures against the value of those who actually participated, which makes the threshold reachable regardless of turnout.
SEBI records that the Alternative Investment Policy Advisory Committee discussed the agenda and recommended the uniform 75% threshold.
Who this reaches
Every manager who has ever run a consent solicitation, and every investor who has ever been deemed to have agreed to something by not replying to an email. Proposal 2c is the sharpest of the set for funds with a mixed investor base: one methodology per scheme, no side arrangements.
What is not settled
Everything. This is a consultation paper, not a circular. SEBI has not published the comments received, has not said when it will decide, and the draft amendment at Annexure D is draft text. The paper also does not say how the grandfathering in Proposal 5 interacts with a scheme that later amends its PPM.
Sources
- Consultation paper on rationalizing the requirement of obtaining investor consent and ambit of conflicted transactions requiring investor consent under SEBI (Alternative Investment Funds) Regulations, 2012 — SEBI, 30 June 2026 · primary
- Consultation paper, full text, 30 pages, issued 30 June 2026 — SEBI, 30 June 2026 · primary
Dated 30 June 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.