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Corporate Laws Central Ministry of Finance Securities and Exchange Board of India Act, 1992

Revised regulatory framework for Angel Funds under AIF Regulations

10-Sep-2025 | SEBI/HO/AFD/AFD-POD-1/P/CIR/2025/128

SEBI has issued a circular regarding the revised regulatory framework for Angel Funds under AIF Regulations.

By virtue of this circular, SEBI has specified the revised regulatory framework, which includes the conditions and modalities regarding various provisions pertaining to Angel Funds, to improve ease of doing business, enhance risk reduction, and provide operational clarity to Angel Funds.

Key Highlights of the revised framework are as follows:
1. Angel Funds, which are granted registration by SEBI post the issuance of this circular, are allowed to on-board and offer investment opportunities to Accredited Investors only.
2. As stated in regulation 19E of AIF Regulations, an Angel Fund shall not launch any schemes for soliciting funds from angel investors or making any investments. Now it is specified that Investments in investee companies shall be made directly by Angel Funds, without the requirement of launching a scheme for this purpose and the requirement of filing a term sheet with SEBI for launching the scheme and making investment has been discontinued.
3. The conditions have been specified for making additional investments in their existing investee companies, which are no longer start-ups (called as "follow-on investment'), which include the following:
a. Follow-on investment shall be allowed to the extent the post-issue shareholding percentage of the Angel Fund in the investee company does not exceed the pre-issue shareholding percentage.
b. The total investment in an investee company by an Angel Fund, including follow-on investments, shall not exceed INR 25 Crores.
c. The contribution for follow-on investment shall be accepted only from the investors who had contributed to the existing investment in the investee company and pro rata to their contribution in the existing investment.

Kindly refer to the attached document for more information.

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