Sebi to introduce framework for accredited investors

Sebi on Tuesday decided to introduce a framework for accredited investors, a class of investors who may be considered as well-informed about investment products, in the Indian securities market.

The board of Sebi after deliberation approved the proposal to introduce a framework for accredited investors.

Under the proposed framework, individuals, HUFs, family trusts, sole proprietorships, partnership firms, trusts and corporate based on financial parameters would be eligible for accreditation of investors, Sebi said in a statement after the board meeting.

The accreditation of investors should be carried out through "Accreditation Agencies" like subsidiaries of depositories and specified stock exchanges, and any other specified institutions.

The accredited investor concept may offer benefits to investors and financial product or service providers, such as flexibility in minimum investment amount, flexibility and relaxation in regulatory requirements and access to products/ services offered exclusively to accredited investors.

Listing out benefits linked to accreditation, Sebi said accredited investors should 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 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.

Accredited investors with minimum investment of Rs 10 crore with 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 advisers will have the flexibility to determine the limits and modes of fees payable to the Investment Adviser through bilaterally negotiated contractual terms.

Earlier, the Securities and Exchange Board of India (Sebi) came out with a consultation paper in this regard in February.

Photograph: Kunal Patil/PTI Photo