SEBI streamlines criteria for grant of certification to accredited investors

Capital markets regulator SEBI (Securities and Exchange Board of India) has Monday simplified the requirements for the grant of certification to accredited investors.

A person or entity is identified as an accredited investor based on net worth or income. Such investors can invest in securities that may not be available to retail investors.

Under the framework, accreditation agencies, which are also KYC registration agencies (KRAs), can access KYC (know your customer) documents of applicants available with them in the capacity of KRA and can also access the same from the database of other KRAs for accreditation, SEBI said in a circular.

The accreditation agencies will grant accreditation solely based on the KYC and the financial information of the applicants.

The certificate issued by accreditation agencies will include a disclaimer that says, "The assessment of the applicant for accreditation is solely based on the applicant's KYC and financial information and does not in any manner exempt market intermediaries and pooled investment vehicles from carrying out necessary due diligence of the accredited investors at the time of onboarding them as their clients."

The validity period of the accreditation certificate has been revised.

If the applicant meets the eligibility criteria for the preceding financial year, the accreditation certificate issued will be valid for two years. Earlier the accreditation was valid for one year.

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In case the applicant is a newly incorporated entity that does not have financial information for the preceding financial year but meets the applicable net-worth criteria as of the date of application, the accreditation certificate issued will be valid for two years.

The new framework will come into force with immediate effect.

According to SEBI rules, individuals, Hindu undivided families, family trusts, and sole proprietorships need an annual income of Rs 2 crore or a net worth of Rs 7.50 crore, with at least Rs 3.75 crore in financial assets, to qualify for accredited investors.

Alternatively, they are required to have an annual income of Rs 1 crore plus a net worth of at least Rs 5 crore, out of which at least Rs 2.5 crore is in the form of financial assets. Other entities, like trusts and corporates, have their own set criteria for accreditation.