SEBI Extends Accredited Investor Compliance Deadline for Angel Funds to March 2027

The Securities and Exchange Board of India (SEBI) has given certain angel funds nearly seven additional months to comply with the mandatory accredited investor requirement, pushing the deadline to March 31, 2027. 

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The extension applies to angel funds that were registered with SEBI on or before September 10, 2025. These funds were earlier required to comply with the accredited investor mandate by September 8, 2026. 

The additional time follows representations from the Alternative Investment Fund (AIF) industry seeking a longer transition period for existing angel funds to move to the revised regulatory framework. 

What will Change for Existing Angel Funds? 

Through this long transitional phase, angel funds that have registered by September 10, 2025 may continue to offer opportunities to invest up to 200 non-accredited investors. 

This will be different after March 31, 2027, when angel funds will not be allowed to accept investment contributions from non-accredited investors into the investee companies. 

The investors that have invested in the angel fund may retain their initial investment as per the stipulations in the private placement memorandum (PPM) and other fund documents. 

The angel funds which have been registered with SEBI since September 10, 2025 must have already been onboard and have made investments available only to the accredited investors. The recent extension does not hold for them. 

The SEBI circular was issued on Monday, September 8, and came into effect immediately. 

Angel Fund Investment Limits 

Angel funds pool capital from high-net-worth individuals or companies for investments in start-ups and early-stage businesses, where the possibility of losses can be high. 

The minimum amount an investor can invest in an angel fund stands at ₹25 lakh, compared with ₹50 lakh earlier. The maximum investment amount is capped at ₹5 crore. 

Changes have also been made to how much an angel fund can invest in an individual investee company. 

Earlier, an angel fund could invest between ₹25 lakh and ₹10 crore in an investee company. The minimum investment limit has now been reduced to ₹10 lakh, while the maximum has been increased to ₹25 crore per investee company. 

Lock-in Period Reduced in Certain Cases 

The lock-in period for an angel fund’s investment has also been reduced to six months when the fund exits by selling its stake to a third party. 

However, the lock-in period remains one year when the exit takes place through a company buyback or when the angel fund sells its stake to the promoters of the investee company. 

The accredited investor framework is intended to ensure that investors participating in higher-risk investment opportunities have the required financial capacity and understanding. 

For angel funds covered by the extension, the latest move provides additional time to complete their transition before the accredited investor requirement becomes applicable from March 31, 2027.