SEBI to introduce framework for 'Accredited Investors' in securities market

Mumbai, June 29 The SEBI board on Tuesday approved a proposal to introduce a framework for Accredited Investors in the Indian securities market.

'Accredited Investor' is a term referred to a class of investors who may be considered to be well informed or well advised about investment products.

The tag of Accredited Investors may be assigned to individuals, HUFs, family trusts, sole proprietorships, partnership firms, trusts and body corporates based on financial parameters and information as may be specified by SEBI.

Eligible subsidiaries of depositories and specified stock exchanges, and any other specified institutions may be recognised as Accreditation Agencies.

Accreditation agencies would grant accreditation status and issue accreditation certificate to accredited investors.

Under the framework, 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 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.

Further, the 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.

Among other amendments, the SEBI board has approved the proposal to amend the SEBI (Foreign Portfolio Investors) Regulations, 2019 to permit eligible Resident Indian Fund Managers (other than individuals) to be constituents of Foreign Portfolio Investors (FPIs).

Such FPIs shall be investment funds approved by Central Board of Direct Taxes (CBDT) under IT Act. These amendments shall bring the SEBI (FPI) Regulations, 2019 in line with the recent amendments in Section 9A of the IT Act, thereby facilitating Indian fund managers in managing investment funds incorporated, established or registered outside India.

The capital market regulator also amended regulations to define a Credit Rating Agency (CRA) in terms of rating of securities that are listed or proposed to be listed on a recognised stock exchange, and to provide for an explanation specifying that ratings undertaken by a CRA under the respective guidelines of a financial sector regulator or authority shall be under the purview of the concerned financial sector regulator or authority.