The Securities and Exchange Board of India (SEBI), through a circular dated December 18, 2023, has simplified the requirements for the grant of accreditation to investors, along with an extension to the validity of the certification.

Who is an accredited investor?

A person or entity identified as an accredited investor based on net worth or income. Such investors can invest in securities that may not be available to retail investors.

Certification modalities

The accreditation agencies will grant accreditation solely based on the Know Your Customer (KYC) and the financial information of the applicants. Further, the accreditation certificate will include a following disclaimer, “the assessment of the applicant for accreditation is solely based on the applicant’s KYC and financial information and does not in any manner exempt market intermediaries and pooled investment vehicles from carrying out necessary due diligence of the accredited investors at the time of on-boarding them as their clients.”

Under the framework, accreditation agencies, which are also KYC Registration Agencies (KRAs), may access KYC documents of applicants for the purpose of accreditation.

Revisions

Further, the validity of the accreditation certificate has been revised. If the applicant meets the eligibility criteria for the preceding financial year, the accreditation certificate issued will be valid for a period of two years from the date of issuance. It will remain valid for three years, if the eligibility criteria are met in each of the preceding two financial years.

For Individuals, Hindu Undivided Families, Sole Proprietorships, Body Corporates, and Trusts, the circular has provided that the copies of income tax return, net worth certificate, and audited financial statements will be required.

To access the circular: https://www.sebi.gov.in/legal/circulars/dec-2023/simplification-of-requirements-for-grant-of-accreditation-to-investors_79990.html.