SEBI Proposes Investor Consent Reforms for AIFs

Consultation Paper Dated 30.06.2026

SEBI has released a consultation paper proposing changes to the investor consent framework under the SEBI (Alternative Investment Funds) Regulations, 2012. The proposals aim to standardise the process for obtaining investor consent and rationalise the treatment of conflicted transactions in Alternative Investment Funds (AIFs).

The proposed changes are intended to bring greater clarity, uniformity and transparency in cases where investor approval is required.

1. Standardisation of Investor Consent Process

SEBI has proposed to standardise the process for obtaining investor consent under the AIF Regulations.

This will help ensure a consistent approach across AIFs and reduce ambiguity in situations where investor approval is required for specific decisions or transactions.

2. Uniform Approval Threshold Proposed

The consultation paper proposes a uniform approval threshold of 75% of investors by value.

This means that where investor consent is required, approval would be determined by investors representing at least 75% of the investment’s value, subject to the framework proposed by SEBI.

3. Rationalisation of Conflicted Transactions

SEBI has also proposed to rationalise the scope of conflicted transactions requiring investor consent.

The objective is to ensure that only relevant conflict-related transactions are brought within the consent framework, while avoiding unnecessary procedural burden for AIFs.

4. Replacement of ‘Associate’ with ‘Related Party’

The proposal seeks to replace the term ‘associate’ with ‘related party’ for specified conflict-related provisions.

This change is intended to align terminology and provide greater clarity in identifying relationships that may give rise to potential conflicts of interest.

5. Objective of the Proposal

The consultation paper seeks to:

• Standardise the investor consent process under the AIF Regulations;
• Prescribe a uniform approval threshold;
• Rationalise the scope of conflicted transactions requiring consent;
• Improve clarity in conflict-related provisions;
• Reduce interpretational issues for AIFs and investors; and
• Strengthen governance and transparency in AIF operations.

6. Expected Impact

The proposed changes are expected to simplify compliance for AIFs while ensuring adequate investor protection in conflict-related matters. A uniform threshold and clearer terminology may also help reduce disputes and promote consistent governance practices across the AIF industry.

7. Key Takeaway

SEBI has proposed amendments to rationalise the investor consent framework under the SEBI (Alternative Investment Funds) Regulations, 2012. The proposals include standardising the consent process, prescribing a 75% approval threshold by value, rationalising conflicted transactions that require investor consent, and replacing the term ‘associate’ with ‘related party’ in specified conflict-related provisions.