How Do I Start an AIF in India Step by Step?

An Alternative Investment Fund (AIF) is a popular investment structure in India for pooling funds from sophisticated investors to invest in private equity, venture capital, real estate, and other alternative assets. AIFs are regulated by the Securities and Exchange Board of India (SEBI), and starting one requires careful planning, legal structuring, and regulatory compliance. If you are wondering how to start an AIF in India step by step, this guide explains the process in a simple and practical way.

Step 1: Decide the AIF Structure and Category

The first step is choosing the legal structure of the AIF. In India, an AIF can be set up as a Trust, Limited Liability Partnership (LLP), or Company, with trusts being the most commonly preferred structure.

Next, you must select the AIF category:

• Category I – Venture capital funds, social venture funds, SME funds
  
  

• Category II – Private equity funds, debt funds, real estate funds
  
  

• Category III – Hedge funds and funds employing complex trading strategies
  
  

Each category has different compliance and investment norms.

Step 2: Appoint the Sponsor and Manager

Every AIF must have a Sponsor and a Manager. These entities must meet SEBI’s “fit and proper” criteria and have adequate experience in fund management, finance, or related fields. Their background and financial strength play a key role in SEBI approval.

Step 3: Prepare Key Legal Documents

This step involves drafting essential documents such as:

• Trust deed or incorporation documents
  
  

• Investment Management Agreement
  
  

• Private Placement Memorandum (PPM)
  
  

• Fund policies and compliance framework
  
  

These documents define the fund’s investment objectives, governance, risk factors, and investor rights.

Step 4: Meet Capital and Infrastructure Requirements

SEBI requires the Sponsor or Manager to have a minimum continuing interest in the AIF (generally 2.5% of the fund corpus or ₹5 crore, whichever is lower). Additionally, proper office infrastructure, compliance systems, and internal controls must be in place.

Step 5: File the AIF Application with SEBI

The application for AIF registration is filed online on SEBI’s portal along with the required documents and prescribed fees. Accuracy and completeness are crucial to avoid delays and regulatory queries.

Step 6: Respond to SEBI Queries and Clarifications

SEBI may raise questions or seek clarifications regarding the fund structure, strategy, or documents. Timely and clear responses help move the application forward smoothly.

Step 7: Obtain SEBI Registration and Start Operations

Once SEBI is satisfied, it grants the AIF registration certificate. After registration, the fund can begin raising capital, onboarding investors, and making investments in accordance with SEBI regulations.

Ongoing Compliance After Registration

Starting an AIF is only the beginning. Post-registration compliance includes periodic reporting to SEBI, investor disclosures, audits, valuation norms, and adherence to investment restrictions.

How Corpzo Helps You Start an AIF in India

At Corpzo, we offer end-to-end AIF setup and registration services. From structuring and documentation to SEBI filings and post-registration compliance, our experts ensure a smooth and compliant AIF launch.

🌐 Website: www.corpzo.com
📞 Contact: +91 9999 139 391

FAQs – Starting an AIF in India

1. Who regulates AIFs in India?

AIFs in India are regulated by the Securities and Exchange Board of India (SEBI).

2. How long does it take to start an AIF in India?

Typically, the process takes 3 to 6 months, depending on SEBI review and documentation.

3. What is the minimum investment required from investors?

The minimum investment per investor is generally ₹1 crore, as per SEBI norms.

4. Is foreign investment allowed in Indian AIFs?

Yes, foreign investors can invest, subject to FEMA and SEBI regulations.

5. How does Corpzo assist with AIF registration?

Corpzo manages fund structuring, documentation, SEBI filings, and ongoing compliance support.