Angel Fund Registration (Cat I AIF Sub-category) — SEBI AIF Regulations & Investor Certificate

SEBI (Alternative Investment Funds) Regulations, 2012, Regulation 19A: Angel Fund — sub-category of Category I AIF; minimum corpus ₹10 crore per scheme; maximum 200 investors per scheme; investor minimum commitment ₹25 lakh; investment per investee: min ₹25 lakh, max ₹10 crore; investee conditions: incorporated in India, not older than 10 years, turnover ≤ ₹100 crore, not listed, not promoted by family with net worth > ₹25 crore. Angel Investor eligibility: net worth ≥ ₹2 crore (individual) or ₹10 crore (corporate); or 3 early-stage investments in preceding 3 years; or serial entrepreneur with 1 exit in preceding 5 years; or 10 years senior management experience. SEBI Circular SEBI/HO/AFD-1/PoD/P/CIR/2023/130: Investment Manager net worth ₹5 crore. Regulation 20(13): annual audit within 180 days. Section 10(23FB) ITA 1961: tax pass-through for Category I AIFs including angel funds.

An Angel Fund is a sub-category of a Category I Alternative Investment Fund under Regulation 19A of the SEBI (Alternative Investment Funds) Regulations, 2012. It is specifically designed as a pooling vehicle for angel investors to collectively invest in early-stage unlisted start-ups. Angel Funds differ from general Category I AIFs in several key respects that make them more accessible to smaller pools of capital.

The key features of an Angel Fund under SEBI AIF Regulation 19A are: Minimum corpus: ₹10 crore (lower than the ₹20 crore minimum for other Category I AIFs). Maximum corpus: ₹10 crore per scheme (each investment may be structured as a separate scheme). Individual investor commitment: each investor must commit a minimum of ₹25 lakh (lower than the ₹1 crore minimum for other AIFs). Maximum number of investors per scheme: 200. Investment size per investee: minimum ₹25 lakh, maximum ₹10 crore per investee company. Investee company conditions: the investee must be a start-up that: (i) is incorporated in India; (ii) is not older than 10 years from the date of incorporation (as amended by SEBI); (iii) has a turnover not exceeding ₹100 crore in any preceding FY; (iv) is not promoted by a family with more than ₹25 crore of net worth; and (v) is not listed on any stock exchange.

A Chartered Accountant's role in Angel Fund registration and compliance is primarily to: (i) certify the net worth or income of each angel investor to establish their eligibility under SEBI's definition of an accredited angel investor; (ii) certify the net worth of the Investment Manager entity (₹5 crore minimum as per SEBI Circular SEBI/HO/AFD-1/PoD/P/CIR/2023/130); (iii) certify that the investee company qualifies as a start-up under Regulation 19A conditions (turnover below ₹100 crore, not older than 10 years, not listed); (iv) assist in structuring the Angel Fund as a scheme-based vehicle with appropriate documentation; and (v) provide ongoing compliance including quarterly SEBI reports (Form D) and annual audit under Regulation 20(13).

The Angel Investor Eligibility Certificate is the most distinctive CA deliverable in angel fund transactions. SEBI requires that angel investors demonstrate one of: (a) net worth of at least ₹2 crore (individual) or ₹10 crore (body corporate); or (b) early-stage investment experience (at least 3 investments in start-ups in the preceding 3 years — evidenced by investment agreements); or (c) serial entrepreneur experience (at least one exit from a start-up in the preceding 5 years); or (d) senior management experience (10 years of experience in the field of entrepreneurship, private equity, or senior management in the financial/technology sector). The CA certifies the net worth component of the eligibility certificate.