SEBI eases AIF, FPI norms; tightens disclosure rules for chairman, whole-time members

The Securities and Exchange Board of India (SEBI) on Monday approved a series of regulatory changes spanning alternative investment funds (AIFs), foreign portfolio investors (FPIs) and governance norms, aimed at easing operations while tightening oversight.Among the key decisions, the regulator provided greater flexibility to AIFs in the winding up of schemes and related registrations. SEBI also approved the proposal to permit net settlement of funds for transactions undertaken by foreign portfolio investors (FPIs) in the cash market, enabling netting of obligations and streamlining settlement processes.

The move is aimed at improving capital efficiency and reducing operational complexities for FPIs.
Additionally, the Board cleared amendments to the ‘fit and proper person’ criteria, alongside measures to lower the minimum investment threshold in the Social Impact Fund under AIFs to ₹1,000 from ₹2 lakh, broadening access to such instruments.
The regulator also cleared measures to enhance ease of doing business for market participants operating in real estate investment trusts (REITs) and infrastructure investment trusts (InvITs).On governance, the Board approved recommendations of a high-level committee on conflict of interest and disclosures applicable to SEBI members and officials. Under the revised framework, the Chairman and whole-time members may be required to choose from specified options for managing their investments upon assuming office, including liquidation, freezing holdings, or selling under defined conditions.

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Further, investments in equity and equity-related instruments in commercial ventures must be fully liquidated or kept frozen during their tenure. The Board also approved bringing the Chairman and whole-time members within the definition of ‘insider’, ensuring a uniform application of restrictions on investments and trading.

This marks the fifth Board meeting chaired by SEBI Chairman Tuhin Kanta Pandey since he assumed office on March 1, 2025.