Overview
The Securities and Exchange Board of India (“SEBI”), vide circular HO/19/(8)2025-AFD-POD1/I/1266/2025 dated December 30, 2025, has prescribed a mandatory certification requirement for Compliance Officers of Managers of Alternative Investment Funds (AIFs). The circular has been issued under the SEBI (Alternative Investment Funds) Regulations, 2012 and comes into force with immediate effect.
Regulatory Framework
In terms of Regulation 20(17) of the SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”), the Manager of an AIF is required to appoint a Compliance Officer who is responsible for monitoring compliance with the provisions of the SEBI Act, rules, regulations, notifications, circulars, guidelines, instructions and other directives issued by SEBI. Further, Regulation 20(18) of the AIF Regulations provides that the Compliance Officer shall satisfy the eligibility criteria as may be specified by SEBI from time to time.
Certification Requirement
Pursuant to the above, SEBI has specified that the Compliance Officer of the Manager of an AIF shall obtain certification from the National Institute of Securities Markets (NISM) by passing the NISM Series III-C: Securities Intermediaries Compliance (Fund) Certification Examination, as referred to in the NISM communique dated November 20, 2025.
Applicability and Timeline
SEBI has directed that with effect from January 01, 2027, only those persons who have obtained the aforesaid NISM certification shall be appointed as, or shall continue to act as, Compliance Officers of Managers of AIFs. The circular itself is effective immediately, thereby requiring AIF Managers to align their compliance framework with this requirement during the transition period.
Compliance Test Report Requirement
The circular further requires that the trustee, sponsor or manager of the AIF, as applicable, shall ensure that the Compliance Test Report prepared by the Manager, in terms of paragraph 15.2 of SEBI Master Circular No. SEBI/HO/AFD-1/AFD-1-PoD/P/CIR/2024/39 dated May 07, 2024, specifically includes compliance with the provisions of this circular.
Practical Considerations for AIF Managers
AIF Managers should review the certification status of their existing Compliance Officers, initiate enrolment for the prescribed NISM examination well in advance of the January 01, 2027 deadline, and ensure appropriate disclosures in the Compliance Test Report. Failure to comply with the certification requirement post the stipulated date may attract regulatory scrutiny.
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