CIRCULAR
SEBI/HO/AFD/PoD1/CIR/2023/ 189 December 18, 2023
To,
All Recognized Stock Exchanges,
All Depositories,
All KYC Registration Agencies,
All Alternative Investment Funds,
All Portfolio Managers,
All Investment Advisers
Sir / Madam,
Sub: Simplification of requirements for grant of accreditation to investors
1. SEBI vide Circular No. SEBI/HO/IMD/IMD-I/DF9/P/CIR/2021/620 dated August 26, 2021 on
‘Modalities for implementation of the framework for Accredited Investors’, specified a
framework for accreditation of investors by Accreditation Agencies. Based on the feedback
received from various stakeholders, to provide flexibility and facilitate ease of accreditation of
investors, it has been decided to simplify the requirements for grant of accreditation to
investors as under:
1.1. Accreditation Agencies, which are also KYC Registration Agencies (KRAs), may access Know
Your Customer (KYC) documents of applicants available with them in capacity of KRA and
may also access the same from the database of other KRAs, for the purpose of
accreditation.
1.2. The Accreditation agencies shall grant accreditation solely based on the KYC and the
financial information of the applicants.
1.3. To this effect, the accreditation certificate issued by accreditation agencies shall include
the 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.”
1.4. The validity period of the accreditation certificate has been revised as under:
1.4.1. If the applicant meets the eligibility criteria for preceding one financial year, the
accreditation certificate issued shall be valid for a period of two years from the
date of issuance. (earlier the accreditation was valid for one year)
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1.4.2. If the applicant meets the eligibility criteria in each of the preceding two financial
years, the accreditation certificate issued shall be valid for a period of three years
from the date of issuance. (earlier the accreditation was valid for maximum two
years)
1.4.3. If the applicant is a newly incorporated entity, which does not have financial
information for the preceding financial year but meets the applicable net-worth
criteria as on the date of application, the accreditation certificate issued shall be
valid for a period of two years from the date of issuance.
2. Accordingly, Annexure A (‘Modalities of accreditation’) and Annexure B (‘List of documents to
be submitted by applicant for accreditation’) to the SEBI Circular No. SEBI/HO/IMD/IMD-
I/DF9/P/CIR/2021/620 dated August 26, 2021 have been revised and are given at Annexure 1
and Annexure 2 of this circular respectively.
3. Further, Stock Exchanges and Depositories are directed to bring the provisions of this circular
to the notice of their subsidiaries who are recognized by SEBI as Accreditation Agencies.
4. The provisions of this circular shall come into force with immediate effect.
5. This circular is issued with the approval of the competent authority.
6. This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and
Exchange Board of India Act, 1992 to protect the interests of investors in securities and to
promote the development of, and to regulate the securities market.
7. The circular is available on SEBI website at www.sebi.gov.in under the categories
“Legal framework - Circulars” and “Info for - Alternative Investment Funds”.
Yours faithfully,
Sanjay Singh Bhati
Deputy General Manager
Tel no.: +91-22-26449222
ssbhati@sebi.gov.in
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Annexure 1
Modalities of Accreditation
1. Eligibility Criteria for Accredited Investors
1.1. The following persons shall be eligible to be considered as Accredited Investor (‘AI’):
(i) Individuals, HUFs, Family Trusts and Sole Proprietorships, which meet the criteria as
under:
(a) Annual Income ≥ INR 2 Crore; OR
(b) Net Worth ≥ INR 7.5 Crore, out of which at least INR 3.75 Crore is in the form
of financial assets; OR
(c) Annual Income ≥ INR 1 Crore + Net Worth ≥ INR 5 Crore, out of which at least
INR 2.5 Crore is in the form of financial assets.
(ii) Partnership Firms set up under the Indian Partnership Act, 1932 in which each
partner independently meets the criteria for accreditation.
(iii) Trusts (other than family trusts) with net worth greater than or equal to INR 50 Crore.
(iv) Body Corporates with net worth greater than or equal to INR 50 Crore.
1.2. Foreign investor incorporated/established in form other than those mentioned at para
1.1. above shall be subject to eligibility criteria as applicable to Body Corporates.
1.3. In case of accreditation of individual investors, HUFs and Sole Proprietorships, the value
of the primary residence of the individual, Karta of HUF and the Sole Proprietor
respectively, shall not be considered for calculation of net worth.
1.4. In case of investments held jointly by more than one individual, the following conditions
shall apply for eligibility as AI:
(i) Where the joint holders are parent(s) & child(ren), at least one person should
independently fulfil the eligibility criteria for AI.
(ii) Where the joint holders are spouses, their combined income/ net worth should meet
the eligibility criteria for AI.
1.5. For the purpose of reckoning eligibility criteria, net worth of Body Corporates shall be
calculated as under:
Net worth = (Capital + free reserves) - (Accumulated losses + deferred expenditure not
written off)
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1.6. For the purpose of reckoning eligibility criteria, net worth of Trusts shall be calculated as
under:
Net worth = (Book value of all assets, other than intangible assets) - (Book value of total
liabilities)
1.7. The eligibility of foreign investors to be accredited shall be determined on the basis of the
rupee equivalent of their income and/ or net worth, as applicable.
2. Procedure for Accreditation
2.1. For accreditation, the prospective AI (“Applicant”) shall make an application to the
Accreditation Agency in the manner specified by the Accreditation Agency. Detailed
documentation required for accreditation is provided at Annexure 2.
2.2. Accreditation agencies, which are also KYC Registration Agencies (KRAs), may access Know
Your Customer (KYC) documents of applicants available with them in capacity of KRA and
may also access the same from the database of other KRAs, for the purpose of
accreditation.
2.3. The Accreditation Agency shall issue the Accreditation Certificate to the Applicant. Each
Accreditation Certificate shall have a unique accreditation number, name of the
Accreditation Agency, PAN of the Applicant, validity of accreditation (start date and end
date). The Accreditation Certificate shall include a disclaimer that the assessment of the
applicant for accreditation is solely based on the applicant’s KYC and financial information
and does not in any way exempt market intermediaries and pooled investment vehicles
from any due diligence required to be carried out of the accredited investors at the time
of on-boarding them as their clients.
3. Validity of Accreditation
3.1. If the applicant meets the eligibility criteria for preceding one financial year, the
accreditation certificate issued shall be valid for a period of two years from the date of
issuance.
3.2. If the applicant meets the eligibility criteria in each of the preceding two financial years,
the accreditation certificate issued shall be valid for a period of three years from the date
of issuance.
3.3. If the applicant is a newly incorporated entity, which does not have financial information
for the preceding financial year but meets the applicable net-worth criteria as on the date
of application, the accreditation certificate issued shall be valid for a period of two years
from the date of issuance.
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4. Procedure to avail benefits linked to accreditation
4.1. Prospective investors shall, inter-alia, submit a copy of the Accreditation Certificate and
an undertaking to the investment service provider to the effect that:
(i) The prospective investor ‘consents’ to avail benefits under the AI framework.
(ii) The prospective investor has the necessary knowledge and means to understand
the features of the investment Product/service eligible for AIs, including the risks
associated with the investment.
(iii) The prospective investor is aware that investments by AIs may not be subject to the
same regulatory oversight as applicable to investment by other investors.
(iv) The prospective investor has the ability to bear the financial risks associated with
the investment.
4.2. The investment service provider shall independently verify the status of accreditation of
the prospective investor from the concerned Accreditation Agency. Further, investment
service providers may obtain additional undertakings from prospective investors, provided
they do not dilute or contravene the undertakings in terms of Para 4.1 above.
4.3. Prior to entering into a client agreement with an AI, the investment service provider shall
disclose to the AI, details of the relevant conditions and regulatory concessions available
for the proposed investment, applicable under the AI framework.
4.4. The client agreement between the investment service provider and AI shall, inter-alia,
provide the following:
(i) details of regulatory concessions agreed upon between the investor and the
investment service provider, and the conditions for availing the same, and
(ii) consequences, if any, in the event of the investor becoming ineligible to be an AI
during the tenure of the said agreement.
5. Flexibility to investors to withdraw ‘Consent’
5.1. Accredited Investors shall have the flexibility to withdraw their ‘Consent’ and discontinue
availing benefits of accreditation, subject to the following:
(i) An investor who withdraws ‘Consent’ after availing the benefit of lower ticket size
shall be required to increase the investment to the minimum amount that is
stipulated under the applicable regulatory framework for the particular investment
product, within the timeframe specified in the client agreement.
(ii) If an investor who has availed concessions to the regulatory framework withdraws
the ‘Consent’ furnished to the investment service provider before the expiry of the
client agreement, the investments already made shall be ‘grandfathered’ i.e. such
investments already made shall continue to be reckoned as investments by an AI.
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With effect from the date of withdrawal of consent, any further transaction shall
be in accordance with the regulatory framework applicable to investors other than
AIs.
5.2. Investors in pooled investment products which are launched exclusively for AIs, in which
concessions to regulatory framework have been availed, shall not have the flexibility to
withdraw their Consent.
5.3. The client agreement between the investment service provider and AI shall, inter-alia,
provide the modalities for withdrawal of ‘Consent’ and consequences of the investor
withdrawing the ‘Consent’.
***
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Annexure 2
List of Documents to be submitted by applicant for accreditation
The Applicant shall furnish self-certified copies of the following documents:
Information Document to be submitted
Proof of Identity and Address
In case of Individual/ HUF//Sole (a) Copy of PAN Card
Proprietorship (b) Copy of any ‘Officially Valid Document’
In case of Body Corporates (a) Copy of PAN card
(b) Document of Incorporation
In case of Trusts (a) Copy of PAN Card.
(b) Copy of registered trust deed
Authorization to seek accreditation
In case of body Letter from authorized signatory to apply for accreditation.
corporates/trusts
Proof of financial information
In case of Individual / HUF/Sole a) Copies of Income Tax Return(s) or ITR Acknowledgement
Proprietorship/ Body (Only in case of individuals/HUF/Family Trust/Sole
Corporates/Trusts Proprietorship),
or;
(Number of years for which
financial information is b) Copies of audited Financial Statements, or;
provided shall determine the
validity of the accreditation) c) Copies of Audited Financial Statements prepared by the
statutory auditor for the current financial Year
(Only in case the entity is incorporated in the same
financial Year), or;
d) Net worth Certificate from practicing chartered
accountant.
The latest net-worth certificate shall not be older than 6
months.
(Calculation of Net worth to be given as an Annexure to
the certificate.)
Undertaking
In case of Individual / HUF/ Sole Declaration from Applicant that:
Proprietorship/ Body
Corporates/Trusts The submissions made to the Accreditation Agency are true
and correct and if found incorrect, the application may be
rejected.
Other Documents*
*Accreditation Agency may seek other documents to verify the genuineness of the information/
documents submitted by the applicants and in cases where the information submitted by
applicants appears to be contradicting/suspicious /fictitious.
***
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