The Securities and Exchange Board of India (SEBI) has announced simplified requirements for the accreditation of investors in the capital markets. Accredited investors are individuals or entities identified based on their net worth or income, allowing them to invest in securities that might not be available to retail investors.
Under the new framework, accreditation agencies, also known as KYC Registration Agencies (KRAs), can access Know Your Customer (KYC) documents of applicants available with them as KRAs and from other KRAs for accreditation purposes. The accreditation agencies will assess applicants solely based on their KYC and financial information.
Accreditation certificates will now have a two-year validity, up from one year in the previous framework. Newly incorporated entities without financial information for the preceding financial year but meeting the applicable net-worth criteria at the time of application will also receive a two-year accreditation.
However, SEBI emphasized that the accreditation certificate does not exempt market intermediaries and pooled investment vehicles from conducting necessary due diligence when onboarding accredited investors.
SEBI’s rules stipulate that individuals, Hindu Undivided Families (HUFs), family trusts, and sole proprietorships must have 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 as accredited investors. Alternatively, they need an annual income of Rs 1 crore plus a net worth of at least Rs 5 crore, with at least Rs 2.5 crore in financial assets. Other entities like trusts and corporates have their own set criteria for accreditation.
The new framework is effective immediately, aiming to streamline the accreditation process and enhance access to investment opportunities in the capital markets.
