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ARTICLE · 21 SEPTEMBER 2026

Same Pool, Different Bargains: Differential Rights In Accredited Investors Only Funds

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In an ordinary alternative investment fund (“AIF”), investors participate in all investments of the scheme in proportion to their commitments. Since November 2024, this principle has not merely been market convention; it is reflected in the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”). Alongside this pro-rata requirement, the AIF Regulations also require investors to be treated pari-passu in respect of other rights available to them.

IndiaFinance and Banking
Ravi Prakash
Ravi Prakash
Sugyan Kumar Singh
Sugyan Kumar Singh
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Background

In an ordinary alternative investment fund (“AIF”), investors participate in all investments of the scheme in proportion to their commitments. Since November 2024, this principle has not merely been market convention; it is reflected in the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”). Alongside this pro-rata requirement, the AIF Regulations also require investors to be treated pari-passu in respect of other rights available to them. However, one particular type of AIF sits outside this pari-passu framework. An Accredited Investors only fund (“AI Fund”) is exempt from the obligation to treat investors pari-passu, subject to disclosure of this position in its placement memorandum and an undertaking from each investor acknowledging such differential treatment.

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