{"id":91102,"date":"2026-09-29T16:55:53","date_gmt":"2026-09-29T11:25:53","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=91102"},"modified":"2026-09-29T16:55:57","modified_gmt":"2026-09-29T11:25:57","slug":"sebi-regulatory-changes-aifs-governance","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/sebi-regulatory-changes-aifs-governance\/","title":{"rendered":"SEBI Approves Set of Regulatory Changes Covering Market Intermediaries, Foreign Investors, Alternative Funds &amp; Governance Norms\u00a0\u00a0"},"content":{"rendered":"<p>The Securities and Exchange Board of India (<a href=\"https:\/\/www.sebi.gov.in\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>SEBI<\/strong><\/a>) has approved several important regulatory changes in its 2026 Board meeting. These changes make compliance easier for <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Market&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;A market is a structured environment, either physical or virtual, where buyers and sellers convene to trade goods and services. This trading hub operates based on the principles of supply and(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/market\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>market<\/a> participants while maintaining market integrity, investor protection, and governance standards.&nbsp;<\/p>\n\n\n\n<p>The new measures will impact various market segments such as<strong> <a href=\"https:\/\/enterslice.com\/alternative-investment-fund-registration\" target=\"_blank\" rel=\"noreferrer noopener\">Alternative Investment Funds<\/a><\/strong> (AIFs), Foreign Portfolio Investors (FPIs), Social Impact Funds, REITs, and InvITs. The &lsquo;fit and proper&rsquo; criteria for market intermediaries have also been changed. SEBI has also tightened the conflict-of-interest framework for its board members and officials.&nbsp;<\/p>\n\n\n\n<p>However, not all changes become effective immediately after board approval. In many cases, regulatory amendments, Gazette notifications, circulars, or operational guidelines will be required. Therefore, the entities concerned will have to keep an eye on the final notification.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Key SEBI Regulatory Changes&nbsp;<\/h2>\n\n\n\n<p>SEBI&rsquo;s recent decisions suggest that the regulator is trying to reduce the compliance burden on one hand while strengthening accountability on the other.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Area<\/strong>&nbsp;<\/td><td><strong>Key Change<\/strong>&nbsp;<\/td><td><strong>Expected Impact<\/strong>&nbsp;<\/td><\/tr><tr><td><strong>AIFs<\/strong>&nbsp;<\/td><td>Retention of liquidation proceeds beyond fund life in specified cases&nbsp;<\/td><td>Easier fund winding-up&nbsp;<\/td><\/tr><tr><td><strong>Inoperative AIFs<\/strong>&nbsp;<\/td><td>New category for funds that have stopped active operations&nbsp;<\/td><td>Reduced recurring compliance&nbsp;<\/td><\/tr><tr><td><strong>FPIs<\/strong>&nbsp;<\/td><td>Net settlement for eligible outright cash-market transactions&nbsp;<\/td><td>Lower funding requirements&nbsp;<\/td><\/tr><tr><td><strong>Social Impact Funds<\/strong>&nbsp;<\/td><td>Individual investment threshold reduced to &#8377;1,000&nbsp;<\/td><td>Wider investor participation&nbsp;<\/td><\/tr><tr><td><strong>REITs\/InvITs<\/strong>&nbsp;<\/td><td>Greater flexibility in SPVs, investments, and borrowings&nbsp;<\/td><td>Easier fund and project management&nbsp;<\/td><\/tr><tr><td><strong>Intermediaries<\/strong>&nbsp;<\/td><td>Revised fit-and-proper criteria&nbsp;<\/td><td>More principles-based assessment&nbsp;<\/td><\/tr><tr><td><strong>SEBI governance<\/strong>&nbsp;<\/td><td>Stronger disclosures, recusals, and conflict controls&nbsp;<\/td><td>Greater institutional accountability&nbsp;<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>These changes are now mainly for board-level approvals. The exact requirements of each measure will be clarified only after the relevant regulatory amendments, and implementation directions are issued.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">AIFs Get More Flexibility During Fund Winding-Up&nbsp;<\/h2>\n\n\n\n<p>In the case of Alternative Investment Funds or AIFs, some liabilities may remain even after the end of the fund&rsquo;s life, such as tax demands, pending litigation, regulatory matters, or final operational expenses. So, the fund may have to hold onto the money for some time even after the end of the investment activity.&nbsp;<\/p>\n\n\n\n<p>In the previous regime, this situation could have been quite difficult for AIF managers from a<strong> <a href=\"https:\/\/enterslice.com\/aif-compliance-in-india\" target=\"_blank\" rel=\"noreferrer noopener\">AIF compliance<\/a><\/strong> perspective. It is not always easy to complete the entire winding-up process due to unresolved liabilities even after the end of the investment period of the fund.&nbsp;<\/p>\n\n\n\n<p>SEBI has now decided to allow the retention of liquidation proceeds even after the end of the fund&rsquo;s life in certain circumstances. So, the need to keep the fund in an active state unnecessarily to meet genuine pending liabilities may be reduced.&nbsp;<\/p>\n\n\n\n<p><strong>Retention of Liquidation Proceeds<\/strong>&nbsp;<\/p>\n\n\n\n<p>The new framework mainly considers a few situations. These include:&nbsp;<\/p>\n\n\n\n<ul>\n<li>Pending tax demand, litigation, or regulatory proceedings.&nbsp;<\/li>\n\n\n\n<li>Required approval from investors to meet expected liabilities.&nbsp;<\/li>\n\n\n\n<li>Retention of certain amounts for final operational expenses under certain conditions.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p>However, this does not allow the AIF to freely retain investor money. There will need to be proper reasons and supporting documents for the retained amount. The money cannot be retained just because the fund&rsquo;s life has ended.&nbsp;<\/p>\n\n\n\n<p><strong>The &ldquo;Inoperative Fund&rdquo; Concept<\/strong>&nbsp;<\/p>\n\n\n\n<p>SEBI has approved the introduction of another &ldquo;inoperative fund&rdquo; concept. An AIF whose active fund-management activity has ended, but registration cannot be surrendered due to some unresolved matter, can come under this category. This will create an opportunity to reduce some recurring compliance requirements.&nbsp;<\/p>\n\n\n\n<p>AIF managers need to look at a few things now:&nbsp;<\/p>\n\n\n\n<ul>\n<li>&#8239;Identify which schemes are at the end of their fund life.&nbsp;<\/li>\n\n\n\n<li>Prepare a list of tax, litigation, and regulatory liabilities.&nbsp;<\/li>\n\n\n\n<li>Maintain supporting documents for the retained amount.&nbsp;<\/li>\n\n\n\n<li>Review investor-consent requirements.&nbsp;<\/li>\n\n\n\n<li>Prepare for winding up and the registration of the surrender process.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p>This can make the fund closure process more organized and reduce the compliance burden at the end.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">FPIs to Get Net Settlement Facility for Cash-Market Transactions&nbsp;<\/h2>\n\n\n\n<p>Another important decision of SEBI for<strong> <a href=\"https:\/\/enterslice.com\/foreign-portfolio-investment-sebi\" target=\"_blank\" rel=\"noreferrer noopener\">Foreign Portfolio Investors<\/a> <\/strong>or FPIs is to allow fund settlement for eligible outright cash-market transactions.&nbsp;<\/p>\n\n\n\n<p>Currently, under gross settlement, the fund&rsquo;s obligations for purchase and sale transactions have to be managed separately. This can create a large temporary funding requirement. Fund blockage and foreign exchange-related costs can also increase. The new system aims to make this process more efficient.&nbsp;<\/p>\n\n\n\n<p><strong>The new changes-&nbsp;<\/strong>&nbsp;<\/p>\n\n\n\n<p>If an FPI buys Stock A worth &#8377;100 crore and sells Stock B worth &#8377;100 crore in the same settlement cycle.&nbsp;<\/p>\n\n\n\n<p>In case of gross settlement, the FPI will have to arrange funds for the purchase obligation of &#8377;100 crore and deliver Stock B separately.&nbsp;<\/p>\n\n\n\n<p>In case of net settlement, the purchase and sale obligations of eligible transactions can be adjusted. So, if the buy and sell amounts are the same, temporary fund blockage of large amounts can be reduced.&nbsp;<\/p>\n\n\n\n<p><strong>Its importance-<\/strong>&nbsp;<\/p>\n\n\n\n<p>This change can have several practical benefits:&nbsp;<\/p>\n\n\n\n<ul>\n<li>The temporary funding requirement can be reduced.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul>\n<li>Capital will be less tied up for some time.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul>\n<li>There may be an opportunity to reduce funding costs and foreign exchange-related costs.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p>There may be special advantages during index rebalancing, when FPIs can buy and sell securities in large amounts at the same time.&nbsp;<\/p>\n\n\n\n<p><strong>Important Limitations<\/strong>&nbsp;<\/p>\n\n\n\n<p>The new facility should not be seen as a netting mechanism for the entire settlement system. It will apply to certain eligible outright cash-market transactions.&nbsp;<\/p>\n\n\n\n<p>Some important points are:&nbsp;<\/p>\n\n\n\n<ul>\n<li>The facility will be applicable only for prescribed eligible transactions.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul>\n<li>In case of securities settlement, the gross settlement mechanism will continue.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul>\n<li>Applicable Securities Transaction Tax (STT) and stamp duty requirements will continue.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul>\n<li>In case of non-outright transactions, the existing settlement requirements will continue to be applicable.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p>As per the approved framework of SEBI, the facility is targeted to be implemented by 31 December 2026. However, the final operational process, system requirements, and eligibility conditions will be clarified through relevant circulars or guidelines.&nbsp;<\/p>\n\n\n\n<p>So, it is important for FPIs and their custodians to review the settlement systems, reconciliation processes, and treasury arrangements.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Social Impact Funds Open the Door to Smaller Investors&nbsp;<\/h2>\n\n\n\n<p>SEBI has approved a reduction in the minimum investment for individual investors from &#8377;2 lakh to &#8377;1,000 in Social Impact Funds. Social Impact Funds are linked to the AIF framework and the Social Stock Exchange ecosystem. They raise capital for social sector projects and enterprises.&nbsp;<\/p>\n\n\n\n<p>The lower minimum amount will allow more individual investors to access this type of investment. This can increase participation in social finance. However, a lower entry amount does not reduce investment risk. Investors need to be clear about liquidity, returns, and product structure. Therefore, simple disclosure and responsible communication are very important for fund managers.&nbsp;<\/p>\n\n\n\n<p><strong>More Operational Flexibility for REITs and InvITs<\/strong>&nbsp;<\/p>\n\n\n\n<p>SEBI has approved some operational flexibility for REITs and InvITs. This handles practical issues like project completion, SPV management, temporary investments, and borrowings easily.&nbsp;<\/p>\n\n\n\n<p><strong>Continued Holding of SPVs by InvITs<\/strong>&nbsp;<\/p>\n\n\n\n<p>There may still be some work remaining in the Special Purpose Vehicle, or SPV, even after the concession period of an infrastructure project ends, such as pending claims, litigation, tax matters, or defect-liability obligations. In such a situation, exiting the SPV immediately is not always practical.&nbsp;<\/p>\n\n\n\n<p>The new framework will allow InvITs to hold the SPV even after project completion if certain conditions are met. However, this holding will not be for an indefinite period. InvITs will have to exit the SPV within the specified period or use it for a new eligible infrastructure project.&nbsp;<\/p>\n\n\n\n<p><strong>Wider Temporary Investment Options<\/strong>&nbsp;<\/p>\n\n\n\n<p>Some flexibility has also been added for holding temporary funds of <a href=\"https:\/\/enterslice.com\/reit-registration\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>REITs<\/strong><\/a> and InvITs. The increased investment opportunities in eligible liquid mutual fund schemes help to manage temporary surplus funds.&nbsp;<\/p>\n\n\n\n<p>However, it is important to adhere to credit quality, liquidity, and your own investment policy while investing.&nbsp;<\/p>\n\n\n\n<p><strong>Greenfield Projects and Borrowing Flexibility<\/strong>&nbsp;<\/p>\n\n\n\n<p>SEBI has also approved some other changes, which include:&nbsp;<\/p>\n\n\n\n<ul>\n<li>Limited greenfield infrastructure project exposure for privately listed InvITs.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul>\n<li>Enhanced borrowing flexibility for certain highly leveraged InvIT structures.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul>\n<li>Possibility of using borrowing for needs such as eligible capital expenditure and major maintenance.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul>\n<li>Flexibility in refinancing of certain existing debt.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p>These changes may give REITs and InvITs some more operational space in project and fund management. However, proper monitoring of leverage and investment limits is still important.&nbsp;<\/p>\n\n\n\n<p><strong>Revised Fit-and-Proper Criteria for Market Intermediaries<\/strong>&nbsp;<\/p>\n\n\n\n<p>SEBI has also made changes to the fit-and-proper criteria for market intermediaries. These criteria are used to judge factors such as the integrity, honesty, reputation, and ethical conduct of an individual or entity.&nbsp;<\/p>\n\n\n\n<p><strong>FIR or chargesheet will not automatically disqualify an Applicant<\/strong>&nbsp;<\/p>\n\n\n\n<p>In the new approach, a person will not be automatically disqualified just because an FIR or chargesheet has been filed. The matter will be assessed on a principles-based approach, looking at the facts and circumstances.&nbsp;<\/p>\n\n\n\n<p>This is important because an FIR or chargesheet itself does not prove the guilt of a person. However, this does not mean that regulatory scrutiny is decreasing. Rather, relevant facts, conduct, integrity, and overall record will become more important.&nbsp;<\/p>\n\n\n\n<p><strong>Stronger Standards and Due Process<\/strong>&nbsp;<\/p>\n\n\n\n<p>The revised framework has clarified the standards in some areas:&nbsp;<\/p>\n\n\n\n<ul>\n<li>Conviction under an economic offense or securities of law will be relevant for disqualification.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul>\n<li>Certain regulatory events will have to be reported to SEBI within a prescribed timeline.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul>\n<li>The concerned person will be given a reasonable opportunity of being heard before adverse regulatory action is taken.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul>\n<li>Fit-and-proper assessment will be more facts-based and principles-based.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p>Market intermediaries should keep their compliance records updated regularly. Litigation, regulatory proceedings, and corrective actions need to be properly documented.&nbsp;<\/p>\n\n\n\n<p>Compliance teams should also re-examine the fit-and-proper review process. Accurate disclosure and timely reporting will be important, especially for key managerial personnel and persons in control.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">SEBI Strengthens Its Own Conflict-of-Interest and Ethics Framework&nbsp;<\/h2>\n\n\n\n<p>SEBI has approved strengthening its conflict-of-interest and ethics framework for its board members and officials. The changes have been made based on recommendations by a high-level committee.&nbsp;<\/p>\n\n\n\n<p>This ensures greater transparency, accountability, and proper conflict management in regulatory decision-making.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Governance Area<\/strong>&nbsp;<\/td><td><strong>Key Measure<\/strong>&nbsp;<\/td><\/tr><tr><td><strong>Investments<\/strong>&nbsp;<\/td><td>Tighter restrictions for senior SEBI officials&nbsp;<\/td><\/tr><tr><td><strong>Disclosures<\/strong>&nbsp;<\/td><td>Greater reporting of assets, liabilities, and investments&nbsp;<\/td><\/tr><tr><td><strong>Recusal<\/strong>&nbsp;<\/td><td>Digital system for identifying and recording conflicts&nbsp;<\/td><\/tr><tr><td><strong>Employment<\/strong>&nbsp;<\/td><td>Disclosure of negotiations concerning future employment&nbsp;<\/td><\/tr><tr><td><strong>Whistleblowing<\/strong>&nbsp;<\/td><td>Mechanism for reporting actual or perceived conflicts&nbsp;<\/td><\/tr><tr><td><strong>Ethics oversight<\/strong>&nbsp;<\/td><td>Creation of an Office of Ethics and Compliance&nbsp;<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>Under the new framework, the investment and disclosure requirements of the SEBI Chairperson and Whole-Time Members will be stricter. Specific restrictions and reporting requirements will apply to their personal investments.&nbsp;<\/p>\n\n\n\n<p>Recusal will play an important role for conflict. If an official&rsquo;s personal interest is involved in a regulatory matter, then there will be a mechanism for him to recuse himself.&nbsp;<\/p>\n\n\n\n<p>It has also been approved to create a digital conflict-management system. It helps to identify conflicts, keep records, and track recusal.&nbsp;<\/p>\n\n\n\n<p>In addition, a whistleblower mechanism and an Office of Ethics and Compliance have also been created. So, an attempt has been made to further organize conflict management in SEBI&rsquo;s own internal governance structure.&nbsp;<\/p>\n\n\n\n<p><strong>What These Changes Mean for Regulated Entities?<\/strong>&nbsp;<\/p>\n\n\n\n<p>According to the new changes by SEBI, regulated entities will have to be aware of the new rules and review their existing compliance processes.&nbsp;<\/p>\n\n\n\n<p><strong>For AIFs<\/strong>&nbsp;<\/p>\n\n\n\n<ul>\n<li>Identify schemes that are nearing the end of their fund life.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul>\n<li>Prepare a list of tax, litigation, and operational liabilities.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul>\n<li>Maintain proper supporting documents for retained amounts.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p><strong>For FPIs<\/strong>&nbsp;<\/p>\n\n\n\n<ul>\n<li>Review settlement systems and treasury requirements.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul>\n<li>Coordinate with custodians for new net-settlement mechanisms.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p><strong>For Intermediaries<\/strong>&nbsp;<\/p>\n\n\n\n<ul>\n<li>Review fit-and-proper policies.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul>\n<li>Strengthen internal processes for reporting regulatory events.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p><strong>For REITs and InvITs<\/strong>&nbsp;<\/p>\n\n\n\n<ul>\n<li>Review existing SPV holdings.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul>\n<li>Examine investment policies and leverage arrangements.&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul>\n<li>Align internal controls with new flexibility.&nbsp;<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">How Can Enterslice Help with SEBI Compliance?&nbsp;<\/h2>\n\n\n\n<p>When SEBI regulations change, compliance cannot be ensured by just reading the notification. Businesses need to understand how the new rules will impact their existing structure, documents and internal processes. Here, Enterslice can provide compliance support.&nbsp;<\/p>\n\n\n\n<p><strong>Our Services:<\/strong>&nbsp;<\/p>\n\n\n\n<ul>\n<li>Regulatory compliance assessment&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul>\n<li>Existing documents and policies review&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul>\n<li>Compliance process structuring&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul>\n<li>Regulatory filing and documentation support&nbsp;<\/li>\n<\/ul>\n\n\n\n<ul>\n<li>Ongoing monitoring of SEBI notifications and amendments&nbsp;<\/li>\n<\/ul>\n\n\n\n<p>Not every business has the same regulatory requirements. So, it is more important to identify the required compliance areas by the existing setup. Enterslice can help businesses understand these changes and align their compliance process as per the applicable requirements.&nbsp;&nbsp;<\/p>\n\n\n\n<p><strong>To Wrap Up<\/strong>&nbsp;<\/p>\n\n\n\n<p>SEBI&rsquo;s recent regulatory change is to create some operational flexibility for market participants while maintaining regulatory oversight. For AIFs, FPIs, intermediaries, REITs and InvITs, the changes may have a practical impact on the compliance process.&nbsp;<\/p>\n\n\n\n<p>However, board approval is not the final step. It is important to keep an eye on final regulations, Gazette notifications, circulars and implementation guidelines. <strong><a href=\"https:\/\/enterslice.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">Enterslice<\/a> <\/strong>can provide businesses with the necessary regulatory support to update internal processes and understand compliance requirements with these changes. So, connect with us today and make your compliance super easy.&nbsp;&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Popular Queries About Foreign Investors, Alternative Funds &amp; Governance Norms<\/h2>\n\n\n<div class=\"saswp-faq-block-section\"><ol style=\"list-style-type:none\"><li style=\"list-style-type: none\"><h3>What are the latest regulatory changes approved by SEBI?<\/h3><p class=\"saswp-faq-answer-text\">SEBI has approved several changes to AIFs, FPIs, Social Impact Funds, REITs, InvITs, market intermediaries, and its own internal governance framework. These include greater flexibility in AIF winding-up, net settlement for eligible FPI cash-market transactions, a lower investment threshold for Social Impact Funds, and revised fit-and-proper criteria. Conflict-of-interest and disclosure requirements for SEBI officials have also been tightened.&nbsp;<\/p><\/li><li style=\"list-style-type: none\"><h3>What changes has SEBI approved for AIFs?<\/h3><p class=\"saswp-faq-answer-text\">SEBI has made provisions to allow AIFs to retain liquidation proceeds even after the end of fund life in certain circumstances. These may include tax, litigation, regulatory, and some operational liabilities. The concept of an inoperative fund has also been introduced. This will help reduce some recurring compliance for AIFs that have ceased active fund-management but are yet to surrender their registration.&nbsp;<\/p><\/li><li style=\"list-style-type: none\"><h3>What is an inoperative fund under the new AIF framework?<\/h3><p class=\"saswp-faq-answer-text\">An inoperative fund is an AIF that has ceased active fund-management activity but still has some unresolved obligations or retained proceeds. In this situation, fulfilling certain conditions may reduce some of the recurring compliance requirements. However, the AIF manager will have to comply with the prescribed conditions and maintain the necessary records and documents properly.&nbsp;<\/p><\/li><li style=\"list-style-type: none\"><h3>What is the new net settlement facility for FPIs?<\/h3><p class=\"saswp-faq-answer-text\">SEBI has approved net settlement of funds for outright cash-market transactions of eligible FPIs. Instead of arranging the entire purchase amount separately for qualifying buy and sell transactions, settlement can be done as per the net fund requirement. This can reduce temporary capital blockage and funding cost. However, the settlement of securities will still be as per the applicable settlement mechanism.&nbsp;<\/p><\/li><li style=\"list-style-type: none\"><h3>How will the FPI net settlement facility help during index rebalancing?<\/h3><p class=\"saswp-faq-answer-text\">FPIs can buy and sell many securities at once during index rebalancing. Even if there are sale proceeds in the gross funding system, it may be necessary to arrange a large amount separately. Net settlement can reduce this temporary funding requirement. So, treasury management can be easier, and related funding costs and operational friction can be reduced to some extent.&nbsp;<\/p><\/li><li style=\"list-style-type: none\"><h3>What has SEBI changed for Social Impact Funds?<\/h3><p class=\"saswp-faq-answer-text\">SEBI has approved the reduction of the minimum investment for individual investors in Social Impact Funds from &#8377;2 lakh to &#8377;1,000. So, the opportunity for small investors to participate in such funds may increase. However, it is important to understand the fund structure, risk, liquidity, and applicable disclosures well before investing. A lower minimum investment does not necessarily mean lower investment risk.&nbsp;<\/p><\/li><li style=\"list-style-type: none\"><h3>What changes has SEBI approved for REITs and InvITs?<\/h3><p class=\"saswp-faq-answer-text\">SEBI has approved a number of operational flexibilities for REITs and InvITs. These include retention of SPVs of InvITs after project completion in certain circumstances, more options for temporary investment, and limited greenfield project investment for privately listed InvITs. Borrowing flexibility has also been increased in some cases. These changes can help in managing project management, treasury, and financing requirements.&nbsp;<\/p><\/li><li style=\"list-style-type: none\"><h3>Does an FIR automatically disqualify a market intermediary under the revised fit-and-proper rules?<\/h3><p class=\"saswp-faq-answer-text\">No, an FIR or chargesheet is filed does not automatically disqualify a market intermediary. The revised framework states that the matter should be considered after considering the relevant facts and circumstances. Matters like integrity, honesty, reputation, and ethical conduct will also be looked at. However, convictions under economic offences or securities laws are still a significant factor in the fit-and-proper assessment and may lead to disqualification in certain cases.&nbsp;<\/p><\/li><li style=\"list-style-type: none\"><h3>What changes has SEBI made to its conflict-of-interest framework?<\/h3><p class=\"saswp-faq-answer-text\">SEBI has tightened the conflict-of-interest framework for its members and officials. It includes investment restrictions, disclosures, conflict identification, and recusal requirements. A digital conflict-management system, whistleblower mechanism, and Office of Ethics and Compliance have also been put in place. Investment and transparency requirements for chairpersons and full-time members have been tightened so that potential conflicts can be better identified and managed.&nbsp;<\/p><\/li><li style=\"list-style-type: none\"><h3>Are SEBI Board-approved regulatory changes immediately effective?<\/h3><p class=\"saswp-faq-answer-text\">No, not all changes become effective on the same day after board approval. Some reforms may require amending regulations, issuing Gazette notifications, issuing circulars or implementation guidelines, and making system changes. Therefore, regulated entities should look at the Board approval and actual effective date separately. The compliance process should be modified after reviewing subsequent notifications and directions of SEBI.&nbsp;<\/p><\/li><\/ol><\/div>","protected":false},"excerpt":{"rendered":"<p>The Securities and Exchange Board of India (SEBI) has approved several important regulatory changes in its 2026 Board meeting. These changes make compliance easier for <a class=\"glossaryLink\" aria-describedby=\"tt\" data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Market&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;A market is a structured environment, either physical or virtual, where buyers and sellers convene to trade goods and services. This trading hub operates based on the principles of supply and(...)&lt;\/div&gt;\" href=\"https:\/\/enterslice.com\/learning\/terms\/market\/\" data-gt-translate-attributes=\"[{&quot;attribute&quot;:&quot;data-cmtooltip&quot;, &quot;format&quot;:&quot;html&quot;}]\">market<\/a> participants while maintaining market integrity, investor protection, and governance standards.&nbsp; The new measures will impact various market segments such as Alternative Investment Funds (AIFs), Foreign Portfolio Investors (FPIs), Social [&hellip;]<\/p>\n","protected":false},"author":85,"featured_media":91103,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[2828],"tags":[],"acf":{"service_id":"227"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v14.6.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>SEBI Approves New Regulatory Changes for Market Intermediaries &amp; AIFs- Enterslice<\/title>\n<meta name=\"description\" content=\"SEBI approves regulatory changes for market intermediaries, foreign investors, AIFs and governance norms. Know the key updates and their compliance impact.\" \/>\n<meta name=\"robots\" content=\"index, follow\" \/>\n<meta name=\"googlebot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta name=\"bingbot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterslice.com\/learning\/sebi-regulatory-changes-aifs-governance\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"SEBI Approves New Regulatory Changes for Market Intermediaries &amp; AIFs- Enterslice\" \/>\n<meta property=\"og:description\" content=\"SEBI approves regulatory changes for market intermediaries, foreign investors, AIFs and governance norms. Know the key updates and their compliance impact.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/enterslice.com\/learning\/sebi-regulatory-changes-aifs-governance\/\" \/>\n<meta property=\"og:site_name\" content=\"Enterslice\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/enterslice\" \/>\n<meta property=\"article:published_time\" content=\"2026-09-29T11:25:53+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2026-09-29T11:25:57+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2026\/09\/SEBI-Approves-Set-of-Regulatory-Changes-Covering-Market-Intermediaries-Foreign-Investors-Alternative-Funds-Governance-Norms.png\" \/>\n\t<meta property=\"og:image:width\" content=\"1746\" \/>\n\t<meta property=\"og:image:height\" content=\"901\" \/>\n<meta name=\"twitter:card\" content=\"summary\" \/>\n<meta name=\"twitter:creator\" content=\"@enterslice\" \/>\n<meta name=\"twitter:site\" content=\"@enterslice\" \/>\n<!-- \/ Yoast SEO plugin. -->","authorName":"Shailja Singh","authorImageUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2023\/06\/MicrosoftTeams-image-3.jpg","authorDescription":"Shailja Singh is a law graduate from Guru Gobind Singh Indraprastha University (GGSIPU), New Delhi. With a strong focus on general corporate law, competition law, and legal compliance, She has proficiency in creating authentic legal content and conducting thorough research. Having worked at various prestigious organizations, she has honed her skills in researching and drafting legal documents. As a Legal Researcher at Enterslice, she is deeply committed to continuous learning and actively contributing to legal research and content creation.","postViews":3,"readingTime":10,"nextPost":null,"prevPost":{"id":91096,"slug":"sebi-spm-platform-clearing-members"},"featuredMediaUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2026\/09\/SEBI-Approves-Set-of-Regulatory-Changes-Covering-Market-Intermediaries-Foreign-Investors-Alternative-Funds-Governance-Norms.png","postTerms":"SEBI","_links":{"self":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/91102"}],"collection":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/users\/85"}],"replies":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/comments?post=91102"}],"version-history":[{"count":2,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/91102\/revisions"}],"predecessor-version":[{"id":91105,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/91102\/revisions\/91105"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media\/91103"}],"wp:attachment":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media?parent=91102"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/categories?post=91102"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/tags?post=91102"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}