Markets

SEBI approves concept of ‘Accredited Investors’

Our Bureau Mumbai | Updated on June 29, 2021

This will be a class of investors who may be considered to be well informed or well advised about investment products

The Securities and Exchange Board of India has approved the introduction of the concept of ‘Accredited Investors’ in the Indian securities market. This will be a class of investors who may be considered to be well informed or well advised about investment products.

Individuals, HUFs, family trusts, sole proprietorships, partnership firms, trusts and body corporates can get accreditation based on financial parameters and information as may be specified by SEBI.

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Eligible subsidiaries of depositories and specified stock exchanges will issue an accreditation certificate to such investors.

Relaxations and flexibility

Accredited investors shall have flexibility to participate in investment products with an investment amount lesser than the minimum amount mandated in the Alternative Investment Funds (AIF) Regulations and Portfolio Managers (PMS) Regulations. AIF for accredited investors, where each investor invests a minimum amount of ₹70 crore, may avail relaxation from regulatory requirements.

Accredited investors, with a minimum investment of ₹10 crore with a registered PMS provider, may avail relaxation from regulatory requirement with respect to investment in unlisted securities and can enter into bilaterally negotiated agreements with the PMS provider.

Accredited investors, who are clients of investment advisors, will have the flexibility to determine the limits and modes of fees payable to the investment advisor through bilaterally negotiated contractual terms.

“This is a welcome move by the regulator, as it will give scope for more innovative products from PMS and fund managers. As the minimum investment threshold is virtually lowered, even high net worth investors can participate in innovative products with much lower capital. In the overall portfolio of individuals, this new opportunity may even enhance their returns if they are game for a little more risk,” said an industry expert.

Published on June 29, 2021

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