Relaxation in Timeline for Disclosure of Allocation Methodology by Angel Funds

The Securities and Exchange Board of India (SEBI) has provided relief to Angel Funds by extending the timeline for disclosing a defined methodology for investment allocation among participating investors. SEBI had earlier amended the SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”) through the Second Amendment Regulations, 2025, which were notified on September 9, 2025, introducing a revised regulatory framework for Angel Funds. Pursuant to these amendments, SEBI issued a circular on September 10, 2025, titled “Revised regulatory framework for Angel Funds under AIF Regulations,” prescribing detailed conditions and procedures to be followed by such funds.

Under paragraph 8.3 of the said circular, existing Angel Funds were required to disclose a defined methodology in their Private Placement Memoranda (PPMs) for allocating investment opportunities among angel investors who approve such investments. Further, it was mandated that any investment made by these funds after October 15, 2025, would have to be allocated strictly in accordance with the disclosed methodology. This reform aimed to enhance transparency, ensure fairness in allocation among consenting investors, and reduce discretionary or opaque practices in deal participation.

However, based on representations received from the AIF industry seeking more time to implement the new requirement, SEBI has decided to grant an extension of the compliance timeline. The new circular, issued with the approval of the competent authority, extends the deadline for adopting and disclosing the allocation methodology to January 31, 2026. Consequently, any investment made by existing Angel Funds after this date must adhere to the methodology specified in their PPMs. The relaxation is intended to provide ease of compliance and allow funds adequate time to modify their documentation and operational frameworks in line with the revised norms.

Source: · SEBI | Relaxation in timeline for disclosure of allocation methodology by Angel Funds