Market regulator Securities and Exchange Board of India (SEBI) introduced a framework for accredited investors.
- SEBI defines accredited investors as “a class of investors who may be considered to be well informed or well advised about investment products”.
- The accredited investors could be individuals, HUFs, sole proprietorships, family trusts, partnership firms, trusts and body corporates based on financial parameters.
- Anyone is eligible to become an accredited investor provided their annual income stands at Rs 2 crore or their net worth pegged at Rs 7.5 crore and financial assets should be at least 3.75 crore.
- “Accreditation Agencies” like subsidiaries of depositories and specified stock exchanges, and/or any other specified institutions can offer this title for one to become an accredited investor.
- Accredited investors will have the 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.
- The Alternative Investment Funds 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.