The Securities and Exchange Board of India (SEBI) Board approved a package of regulatory and internal governance measures spanning Alternative Investment Funds (AIFs), Foreign Portfolio Investors (FPIs), Social Impact Funds (SIFs), Infrastructure Investment Trusts (InvITs), Real Estate Investment Trusts (REITs), the “fit and proper person” framework for intermediaries, and conflict-of-interest rules for SEBI’s Members and officials. For AIFs, the Board approved amendments to allow retention of liquidation proceeds beyond permissible fund life where there is a demonstrable tax or litigation notice or demand, investor consent of at least 75% by value to meet anticipated litigation or tax liabilities, or substantiated operational-expense retention capped at three years from the end of permissible fund life. AIFs seeking to surrender registration while holding such schemes will be tagged as “inoperative funds” with lighter compliance, including discontinuation of periodic filings, private placement memorandum updates and performance benchmarking. For FPIs, SEBI approved net settlement of funds for outright cash-market transactions while continuing gross settlement of securities, with Securities Transaction Tax and stamp duty continuing on a delivery basis, and set an implementation deadline on or before 31 December 2026. Retail access to the Social Stock Exchange is targeted through reducing the minimum individual investment in a SIF of an AIF to INR 1,000 from INR 200,000. InvIT and REIT changes include permitting InvITs to hold SPVs after concession conclusion or termination subject to exiting or adding a new infrastructure project within one year from the later of concession completion, conclusion of pending claims or litigations, or the end of the defect-liability period, expanding permissible liquid mutual fund investments to schemes with credit risk value of at least 10 in Class A-I or Class B-I, allowing privately listed InvITs to invest up to 10% of asset value in greenfield projects, and widening permitted fresh borrowings for higher-leverage InvITs to include capex, major maintenance for road projects and refinancing of principal. On market entry and conduct, SEBI approved amendments to the “fit and proper person” criteria, including removing automatic disqualification solely due to pendency of a SEBI-filed criminal complaint or FIR or a charge sheet for economic offences, expanding conviction-based disqualification to any economic offence or any offence under securities laws, and limiting the registration “non-consideration” trigger for SEBI show-cause notices to proceedings under sections 11B(1) and 11(4) of the SEBI Act while reducing the associated period from one year to six months. The amendments will take effect upon publication in the Official Gazette. Separately, the Board approved key recommendations of a High-Level Committee on conflicts of interest, including applying investment and trading restrictions to the Chair and Whole-Time Members (WTMs) on the same basis as employees, bringing the Chair and WTMs within the definition of “insider”, introducing structured options for handling pre-joining equity holdings, establishing a digital conflict-management and whistleblower system, and creating a new Office of Ethics and Compliance initially supervised by SEBI’s Chief Vigilance Officer. Certain recommendations, including separate regulations for Board Members and an oversight committee for Board-member conflicts, were referred to the Central Government; implementation will involve amendments to the SEBI (Employees’ Service) Regulations, 2001, revisions to the 2008 conflict-of-interest code and operational guidance.

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