Sebi moves to standardise consent rules for AIFs

ET BureauLast Updated: Jul 01, 2026, 06:01:00 AM IST

Synopsis

Securities and Exchange Board of India (Sebi) is proposing significant governance changes for alternative investment funds. The regulator aims to standardize investor consent, enhance oversight of conflict-of-interest deals, and introduce a uniform 75% approval threshold for key decisions. This move seeks to address inconsistencies in current rules and ensure greater transparency and fairness for investors across all AIF regulations.

Mumbai: The Securities and Exchange Board of India (Sebi) on Tuesday proposed changes to the governance framework for alternative investment funds, seeking to standardise how investor consent is obtained, tighten oversight of conflict-of-interest transactions, and introduce a uniform approval threshold for key decisions.

The regulator has proposed replacing the existing mix of two-thirds and 75% investor approval requirements with a single threshold of 75% consent by value of unit holders across AIF regulations wherever investor approval is mandated.

At present, rules mandate that certain material decisions relating to the governance and operations of an AIF, should be done only after obtaining requisite investor consent, with varying thresholds for different requirements.

They prescribe different approval thresholds for different matters.

However, they do not provide guidance on the manner or methodology for obtaining such consent.

"Over time, based on supervisory experience and stakeholder interactions, it has been observed that while the existing framework provides flexibility and operational ease, certain conflict-prone transactions may not be uniformly captured for investor consideration due to the limited scope of entities covered under the current definition of 'associate'. This may lead to situations where transactions involving comparable levels of conflict are treated differently, resulting in interpretational uncertainty," Sebi said in a discussion paper on Tuesday.

Further, diverse market practices have emerged with respect to solicitation, voting methodologies, and treatment of non-responses.

...moreless

...moreless