A S BANKA ADVISORS

If your next round has money coming through an angel fund, the October change to the accredited investor rules left a few blanks: who else could accredit, how long it would last, and how securities market exposure would be measured. SEBI has now filled them in. For a founder, the practical point is that the investor’s status can reach your closing by different routes, and those routes do not carry the same way.

SEBI Circular HO/19/34/11(6)2026-AFD-POD1/I/25244/2026, dated 5 November 2026, sets the modalities for regulation 2(1)(ab) of the SEBI (Alternative Investment Funds) Regulations, 2012, as amended on 15 October 2026. It came into force with immediate effect, and the same text now sits in Chapter 10 of the Master Circular for AIFs.

Why this reaches your closing checklist

An angel investor under regulation 19A(2) is an accredited investor, or key management personnel of the angel fund or its manager, who invests in an angel fund. Para 8.1.3 of the Master Circular requires the fund’s Manager to ensure, when accepting a contribution for an investee company, that the investor qualifies in one of three ways: a valid accreditation certificate, a confirmation of accreditation by the manager, or the deemed criteria in regulation 2(1)(ab).

Angel Funds registered on or before 10 September 2025 must meet the mandate on or before 31 March 2027, and cannot accept contributions for an investee company from non-accredited investors after that date.

Two routes that carry differently

So an angel who invests through funds run by unrelated managers gets more reach from an agency certificate than from one manager’s confirmation. Manager-led accreditation is an additional and optional route, so ask each fund whether it offers it. An Investment Adviser or Research Analyst may not determine status independently; it may only rely on a valid determination by a Manager in its Group (para 3.3).

Where a Manager does accredit, it must confirm the status to the investor in writing, with the date of accreditation and the validity period (para 3.4). That confirmation is the paper to ask for.

The exposure test, now with a method

Securities market exposure is an alternative to the income and net worth tests, which are unchanged. The minimum is Rs 5 crore for an individual, HUF, family trust or sole proprietorship, and Rs 20 crore for a body corporate or a trust other than a family trust (para 5.1). Five things count (para 5.2): securities in dematerialised form, mutual fund investments held through folios, unlisted securities in dematerialised form, investments in the overseas securities market, and investments under the National Pension System.

Note the words on unlisted holdings: the list covers unlisted securities held in dematerialised form. Demat holdings are taken at the eCAS value as of the statement date (para 5.3). Unlisted and overseas holdings not valued in eCAS need a practising CA’s certificate stating the nature of securities, valuation date and value (para 5.4). As proof of the test, para 7.1 asks for a depository eCAS summary not older than six months, or a practising CA’s certificate that the threshold was met within the last six months.

Investors abroad and LLPs

A person resident outside India, as defined under the Foreign Exchange Management Act, 1999, is deemed accredited and needs neither a certificate nor manager-led accreditation (para 9.1). The Manager must still record the basis on which the investor was identified as such (para 9.2), and obligations under the Prevention of Money-laundering Act, 2002 on client due diligence, beneficial ownership and source of funds are not diluted (para 9.3).

An LLP is recognised where each partner independently satisfies the criteria applicable to that partner on the date of determination (para 8.1). This sits alongside the LLP tests in para 10.3.1(b) of the Master Circular, which also lists net worth of at least Rs 50 crore and exposure of at least Rs 20 crore.

Older certificates and scheme life

A certificate issued before 5 November 2026 stays valid for its unexpired period (para 4.5). An investor accredited at onboarding into a scheme stays accredited for the remaining life of that scheme (para 4.4). Para 8.1.3 of the Master Circular looks at the time a contribution for an investee company is accepted, so ask the manager what it records at each point.

Your checklist before the next close

1. Ask each angel fund for its registration date and which accreditation route its investors use.
2. Map each investor to one of the three: valid certificate, manager’s confirmation, or deemed criteria.
3. Check each validity date against your expected closing date.
4. For an investor relying on the exposure test, line up an eCAS summary not older than six months, and a practising CA’s certificate for unlisted or overseas holdings not valued in eCAS.
5. For investors abroad, ask the Manager to record the basis on which each was identified as a person resident outside India.
6. For an LLP investor, test the each-partner route alongside the net worth and exposure tests.

The carousel sets out each route, test and date card by card: Download the full carousel PDF.

Source: Securities and Exchange Board of India, Circular HO/19/34/11(6)2026-AFD-POD1/I/25244/2026, “Review of the framework for Accredited Investors”, 5 November 2026, sebi.gov.in. Source: Securities and Exchange Board of India, Master Circular for Alternative Investment Funds, 3 June 2026, last updated on 5 November 2026, Chapters 8 and 10, sebi.gov.in. Source: SEBI (Alternative Investment Funds) Regulations, 2012, as amended up to 15 October 2026, regulations 2(1)(ab) and 19A(2), sebi.gov.in.

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