SEBI’s June 2026 Master Circular brings two important AIF operating requirements into one rulebook: dematerialised units and professional certification for specified personnel.
Neither reform began with the June document. The demat mandate traces to SEBI’s 2023 framework and subsequent implementation directions, while the compliance-officer certification requirement was issued in December 2025. The master circular consolidates these provisions and clarifies the operating process.
The dematerialisation reality
AIFs are required to issue units in dematerialised form. Instead of relying on physical certificates or standalone paper records, ownership is represented through the depository system using an ISIN for the relevant scheme.
For investors who provide valid demat-account details, units are credited to their respective accounts. This improves ownership records, reconciliation and transmission processes and makes AIF holdings visible alongside other dematerialised securities.
That visibility is not the same as live pricing. AIFs invest in private and often illiquid assets, so NAV is updated according to the valuation frequency applicable to the category and fund documents—not continuously like an exchange-traded share.
The aggregate escrow mechanism
An investor’s failure to provide demat details does not allow the units to remain indefinitely outside the system. Existing or newly allotted dematerialised units for such investors are credited to a dedicated “Aggregate Escrow Demat Account” maintained solely for that purpose.
The AIF manager must continue trying to obtain the investor’s account details. Once they are provided, the units must be transferred from the aggregate escrow account to the investor’s demat account within five working days.
Transfers from or within the escrow account are otherwise restricted. The account is a temporary ownership-record mechanism, not a trading pool or a way for the manager to exercise economic ownership over investors’ units.
The January 1, 2027 compliance deadline
The compliance officer of an AIF manager must pass the NISM Series III-C Securities Intermediaries Compliance (Fund) Certification Examination. From January 1, 2027, a manager may appoint—or continue with—only a compliance officer holding that certification.
The deadline therefore applies to both new appointments and officers already serving. Managers should account for examination availability, preparation, result processing and any need to retake the test rather than treating December 2026 as a comfortable starting point.
Investment-team certification is separate
The key investment team has a different requirement. At least one key person must hold the relevant AIF-manager certification, such as NISM Series XIX-C or the category-specific examination recognised by SEBI.
This is an eligibility condition for the manager and should not be confused with the Series III-C compliance examination. Investment personnel and compliance officers perform different functions and follow different certification routes.
What demat does—and does not—protect
Dematerialisation reduces risks associated with lost certificates, inconsistent ownership records and manual processing. Depository records and scheme-level ISINs also make holdings easier to reconcile.
It does not guarantee the accuracy of a private-asset valuation, create daily liquidity, prevent an investee company from failing or ensure a profitable exit. Those risks remain governed by the portfolio, valuation policy, fund terms and manager’s execution.
The industry’s scale needs context
SEBI reported ₹16.94 lakh crore of cumulative AIF commitments at the end of March 2026. A ₹100 lakh crore figure is a long-term industry ambition, not the market’s current size or a SEBI projection.
Even at today’s scale, stronger ownership records and qualified oversight matter. If private capital expands substantially, the same controls will become more important—not less.
What it means
For investors, the practical priority is to provide correct demat details, confirm that units appear under the correct ISIN and understand how frequently NAV is produced. An escrow credit should trigger completion of account details, not concern that the units have vanished.
For managers, the task is broader than passing examinations. Depository reconciliation, NAV reporting, investor outreach, certification tracking and documented compliance responsibility all need reliable operating systems.
The reforms move AIF administration closer to institutional securities-market infrastructure. They improve record integrity and accountability, while leaving the economic risks of alternative assets exactly where they belong: in the investment itself.