Sebi introduces accredited investors to securities mkt
NEW DELHI: Markets regulator Securities and Exchange Board of India (Sebi) has introduced the concept of ‘accredited investors’ in the Indian securities market, a move expected to open up a new channel for raising funds.
A person or entity will be identified as an accredited investor on the basis of net worth or income.
Individuals, HUFs, family trusts, sole proprietorships, partnership firms, trusts and body corporates can get accreditation based on financial parameters specified by the regulator, according to a notification dated August 3.
The regulator said that subsidiaries of depositories and stock exchanges will issue an accreditation certificate to such investors.
An individual, Hindu Undivided Family, (HUF), family trust or sole proprietorship, can be an accredited investor if their annual income is at least Rs 2 crore or net worth is at least Rs 7.50 crore, with at least half of it in financial assets, Sebi said.
Such entities with a combination of at least Rs 1 crore annual income and a net worth of Rs 5 crore, with at least half in financial assets can also become an accredited investor.
For trusts other than family trusts, a net worth of at least ₹50 crore would be required to qualify as accredited investors while for corporates, a net worth of ₹50 crore will be mandatory.
In case of a partnership firm, Sebi said each partner independently will have to meet the eligibility criteria for accreditation.
The regulator said that central as well state governments, funds set up by them, developmental agencies, qualified institutional buyers, Category I FPIs, sovereign wealth funds and multilateral agencies will be accredited investors and may not be required to obtain a certificate of accreditation.
Accredited investors will have the flexibility to participate in investment products with an investment amount lesser than the minimum amount mandated in the Alternative Investment Fund (AIF) norms and Portfolio Management Services (PMS) rules.
Market experts said this new class of investors will now have more latitude in tailoring financial investments in AIFs and PMS through investment advisors in a manner that suits their risk appetite and investment thesis.
AIF for accredited investors, where each investor invests a minimum amount of ₹70 crore,
may avail relaxation from regulatory requirements.