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Who Can Register for an Alternative Investment Fun
Who Can Register for an Alternative Investment Fun
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Sep 17, 2025
3:43 AM
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An Alternative Investment Fund (AIF) is a privately pooled investment vehicle that collects funds from investors, whether Indian or foreign, for investing in accordance with a defined investment policy. In many jurisdictions, including India and several other financial markets, AIFs are regulated entities and must obtain a license or registration before commencing operations.
Understanding who is eligible to apply for an AIF license is critical for fund managers, institutions, and investors looking to operate within legal and regulatory frameworks.
1. Legal Form of the Applicant
To register as an AIF, the applicant must typically be established as a legal entity such as:
A company
A limited liability partnership (LLP)
A trust (registered under the Indian Trusts Act, 1882, or equivalent in other jurisdictions)
A body corporate (as permitted under applicable laws)
The structure must comply with the governing regulations in the jurisdiction where the AIF is being registered.
2. Sponsor and Manager Requirements
The AIF must have a clearly designated Sponsor and Manager:
The Sponsor is responsible for setting up the fund and contributes a minimum capital commitment (as defined by regulations, e.g., 2.5% of the corpus or INR 5 crore, whichever is lower in India).
The Manager must demonstrate relevant experience in portfolio management, investment analysis, or financial services, and possess adequate infrastructure and staffing to manage the fund professionally.
3. Fit and Proper Criteria
Regulatory bodies such as the Securities and Exchange Board of India (SEBI) evaluate whether the applicant, sponsor, and manager meet the "fit and proper" criteria. This includes assessment of:
Financial integrity
Regulatory track record
No convictions or involvement in fraud or serious misconduct
Professional competence and experience
4. Types of AIFs
Eligible applicants can apply under different AIF categories based on investment strategy:
Category I – Startups, social ventures, SMEs
Category II – Private equity, debt funds
Category III – Hedge funds, complex strategies
Obtaining an AIF license requires rigorous due diligence, proper legal structuring, and ongoing regulatory compliance. It is advisable to engage experienced legal and financial advisors during the application process.
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