SEBI allowed managers of alternative investment funds and portfolio managers to certify investors as accredited investors. This new route aims to speed up onboarding for those seeking specific investment products. "A manager may determine and record an investor's accredited status at onboarding or during the tenure of a scheme," SEBI said.
New route to speed up onboarding; securities market exposure of ₹5 crore for individuals and ₹20 crore for corporates added as eligibility criterion
The Securities and Exchange Board of India (SEBI) has allowed managers of alternative investment funds (AIFs), specialised investment funds (SIFs) and portfolio managers to certify investors as accredited investors, providing an alternative to the existing process through recognised accreditation agencies.
The move is aimed at simplifying and speeding up the accreditation process, which is required for investors seeking access to certain investment products and regulatory relaxations.
Under the new framework, managers can determine an investor's accredited status either at the time of onboarding or during the tenure of a scheme, after verifying that the investor meets the prescribed eligibility criteria. The accreditation will be valid for three years and recognised across AIF, SIF and portfolio management services managers belonging to the same corporate group.
"A manager may determine and record an investor's accredited status at onboarding or during the tenure of a scheme," SEBI said.
The existing route through recognised accreditation agencies will continue. SEBI has clarified that the manager-led route is optional and that managers must rely on a valid accreditation certificate issued by an agency without conducting fresh verification during its validity.
The regulator has also introduced securities market exposure as an additional eligibility criterion. Individuals, Hindu Undivided Families, family trusts, and sole proprietorships will need to have securities market exposure of at least ₹5 crore, while the threshold for body corporates and other trusts is ₹20 crore.
Eligible investments include securities held in dematerialised form, mutual fund investments held through folios, unlisted securities held in demat form, overseas securities market investments, and investments under the National Pension System (NPS). For unlisted and overseas investments not reflected in the consolidated account statement, investors will need to furnish a valuation certificate from a practising chartered accountant.
SEBI has also provided that limited liability partnerships (LLPs) can qualify as accredited investors if each partner independently meets the prescribed eligibility criteria. Persons resident outside India, as defined under the Foreign Exchange Management Act, will be treated as deemed accredited investors and will not need a separate accreditation certificate.
However, this will not exempt AIFs and their managers from client due diligence, identification of beneficial owners, and checks on the source of funds under anti-money laundering rules.
To prevent conflicts of interest, managers undertaking accreditation must maintain supporting records for at least five years, conduct periodic internal audits and have a formal policy covering conflict controls, grievance redressal and data privacy.