Summary of this article
Sebi has extended the Angel Fund compliance deadline to March 31, 2027
Existing Angel Funds can continue with non-accredited investors during the transition
From April 2027, fresh Angel Fund contributions will require accredited investor status
Securities and Exchange Board of India (Sebi) has extended the deadline for existing Angel Funds to comply with its accredited investor mandate by nearly seven months, giving them time until March 31, 2027. The regulator said the extension follows representations from the Alternative Investment Fund (AIF) industry seeking additional time for compliance.
Under the revised timeline, Angel Funds registered with Sebi on or before September 10, 2025, can continue the transition until March 31, 2027. During this period, they cannot offer investment opportunities to more than 200 non-accredited investors.
After March 31, 2027, these funds “shall not accept contributions for investment in an investee company from non-Accredited Investors”, Sebi said in its September 7 circular. Existing investors, however, can continue to hold investments already made in the Angel Fund under the terms of the fund documents.
The extension does not change the rule for newer Angel Funds. Those registered after September 10, 2025, are required to onboard and offer investment opportunities only to accredited investors.
Who Is An Accredited Investor
An accredited investor is a person or entity that meets Sebi’s prescribed financial criteria and has been granted a certificate of accreditation by an accreditation agency. The category is aimed at investors who have the financial capacity to take on higher-risk investments such as those offered by Alternative Investment Funds (AIFs).
Under Regulation 2(1)(ab) of Sebi’s AIF Regulations, 2012, an individual, Hindu Undivided Family (HUF), family trust or sole proprietorship can qualify through any of three routes.
The investor must either have an annual income of at least Rs 2 crore, or a net worth of at least Rs 7.5 crore, of which at least Rs 3.75 crore is in financial assets.
A third route is to have an annual income of at least Rs 1 crore and a net worth of at least Rs 5 crore, with at least Rs 2.5 crore held in financial assets.
A body corporate or a trust other than a family trust is required to have a net worth of at least Rs 50 crore to qualify as an accredited investor. For a partnership firm, each partner must independently meet the eligibility criteria.
Certain institutional investors are treated as accredited investors under Sebi’s rules and do not have to obtain a separate accreditation certificate. These include the Central and state governments, certain government-backed development agencies and funds, qualified institutional buyers, Category I foreign portfolio investors, sovereign wealth funds and multilateral agencies.
Why Does The Status Matter For Angel Funds
Angel Funds invest in startups and early-stage companies, where the chances of losing money are higher than in many traditional investments. Sebi's accredited investor framework is aimed at identifying investors who have the financial capacity and sophistication to take such risks. Sebi has described accredited investors as a class that may be considered “well informed or well advised about investment products.”
The accreditation framework was introduced in 2021. It also gives accredited investors certain regulatory flexibilities. For instance, accredited investors are exempt from the usual minimum investment requirement applicable to AIFs.
Sebi’s revised rules require Angel Funds to raise money from accredited investors. Existing Angel Funds were earlier given until September 8, 2026, to comply. Sebi has now extended the deadline to March 31, 2027.
So, for existing Angel Funds, the extension gives them more time to comply. This means non-accredited investors can invest in these Angel Funds only until March 31, 2027. From April 1, 2027, only accredited investors will be allowed to make fresh contributions for investment in investee companies.
