The Securities and Exchange Board of India (SEBI), the capital markets regulator, has streamlined the accreditation process for investors through a recently released circular, accessible [here](link to the circular).
This move follows SEBI’s August 2021 circular on the ‘Modalities for implementation of the framework for accredited investors,’ which outlined the framework for accrediting investors through accreditation agencies. In response to feedback from stakeholders, SEBI has made changes to simplify the accreditation requirements and enhance flexibility.
Key updates regarding accredited investors:
1. Accreditation agencies, also known as KYC Registration agencies, are now permitted to access KYC documents of applicants available with them and from the database of other KYC Registration Agencies (KRAs) for accreditation purposes.
2. Approval by these agencies will be based solely on the KYC and financial information of the applicants.
3. The accreditation certificate will include a disclaimer emphasizing that the assessment is solely based on the applicant’s KYC and financial information and does not exempt market intermediaries and pooled investment vehicles from conducting necessary due diligence when onboarding accredited investors.
4. The accreditation certificate’s validity has been extended. If an applicant meets the eligibility criteria for the preceding financial year, the certificate will now be valid for two years from the date of issuance (previously one year).
5. If the applicant meets the eligibility criteria for each of the preceding two financial years, the accreditation certificate will be valid for three years from the date of issuance.
6. In the case of a newly incorporated entity lacking financial information for the preceding year, the accreditation certificate will be valid for two years from the date of issuance.
These provisions are effective immediately, and stock exchanges and depositories are instructed to inform their subsidiaries recognized by SEBI as accreditation agencies about the circular’s provisions.
