Authored by Anish V
The Securities and Exchange Board of India (“SEBI”), vide its circular dated 30 December 2025 (HO/19/(8)2025-AFD-POD1/I/1266/2025) (“Circular”), has clarified on the certification requirements applicable to Compliance Officers of Managers of Alternative Investment Funds (“AIFs”). The Circular has been issued pursuant to the SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”) and it strengthens compliance oversight within the AIF ecosystem by prescribing a mandatory professional certification for the Compliance Officers.
Regulatory Framework for Compliance Officers under AIF Regulations
Regulation 20 (17) of the AIF Regulations mandates that the manager of an AIF shall appoint a Compliance Officer, who is responsible for monitoring compliance with act, rules, regulations or any other directives issued by SEBI.
Further, Regulation 20 (18) empowers SEBI to specify the eligibility criteria for such Compliance Officers from time to time. The Circular has been issued in exercise of this power.
Mandatory NISM Certification
Certification Prescribed
SEBI has prescribed that the Compliance Officer of the manager of an AIF shall obtain certification by successfully clearing the ‘NISM Series-III-C: Securities Intermediaries Compliance (Fund) Certification Examination’, as notified by the National Institute of Securities Markets (“NISM”) vide its press release dated 20 November 2025.
This requirement has been introduced to ensure that the standards of knowledge of Compliance Officers, with respect to regulatory requirements applicable to fund-based intermediaries, remain adequate.
Applicability and Transition Timeline
SEBI has prescribed a clear transition timeline for compliance with the certification requirement. With effect from 1 January 2027, only those individuals who have obtained the prescribed NISM certification shall be appointed or continue to act as Compliance Officers and the Managers of the AIFs are responsible to ensure that the Compliance Officers satisfy this requirement within the stipulated timeline.
Notably, while the Circular comes into force with immediate effect, the certification requirement has been given a prospective compliance window to enable orderly transition.
Compliance Test Report Obligations
The Circular further requires that the Compliance Test Report prepared by the manager of an AIF, in terms of para 15.2 of SEBI Master Circular dated 7 May 2024, must expressly include confirmation of compliance with the requirements set out in the present Circular.
