The board of market regulator SEBI on Tuesday introduced the framework for accredited investors in securities market.
The Board after deliberation approved the proposal to introduce a framework for ‘Accredited Investors’ in the Indian securities market, a class of investors who may be considered to be well informed or well advised about investment products.
The salient features of the proposed framework include:
1. Eligibility criteria for Accredited Investors who may be Individuals, HUFs, Family Trusts, Sole Proprietorships, Partnership Firms, Trusts and Body Corporates based on financial parameters and information as may be specified by SEBI.
2. Eligible subsidiaries of depositories and specified stock exchanges, and any other specified institutions to be recognized as Accreditation Agencies. Accreditation Agencies to grant accreditation status and issue Accreditation Certificate to Accredited Investor.
3. Modalities of accreditation and procedure to avail benefits linked to accreditation.
The benefits linked to accreditation include:
Firstly, 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.
Secondly, AIF for Accredited Investors where each investor invests minimum investment amount of Rs 70 crore may avail relaxation from regulatory requirements such as portfolio diversification norms, conditions for launch of schemes and extension of tenure of the AIF.
Thirdly, Accredited Investors with minimum investment of Rs 10 crore with registered PMS provider, may avail relaxation from regulatory requirement regarding investment in unlisted securities and can enter into bilaterally negotiated agreements with the PMS provider.
Lastly, Accredited Investors who are clients of Investment Advisers will have the flexibility to determine the limits and modes of fees payable to the Investment Adviser through bilaterally negotiated contractual terms.