The concept of class of investors (typically termed as accredited investors or qualified investors or professional investors) who have an understanding of various financial products and the risks- returns associated with them and are able to take informed decisions regarding their investments is recognized globally by many securities and financial market regulators.
Further, they are also considered to be capable of dealing in relatively riskier investment products due to their financial capacity and ability to absorb possible financial losses. The global regulators reckoned that these investors are sophisticated enough to not require extensive regulatory protection, and therefore, issuers of securities and providers of investment products/ services are offered a regulation-light regime, to offer their products/services to accredited investors.
Based on the above, it was envisaged by SEBI to introduce the concept of Accredited Investors in India with uniform eligibility criteria, accompanied by a flexible regulatory framework for the various securities market products and services may be beneficial to the development and growth of the Indian securities market.
Accordingly, SEBI (Portfolio Managers) Regulations, 2020 on August 03, 2021 and SEBI circular SEBI/HO/IMD/IMD-I/DF9/P/CIR/2021/620 dated August 26, 2021, introduced the concept of Accredited Investors and modalities for implementation of the framework for Accredited Investors.
In view of the same, given below is the framework for Accredited Investors:
“Accredited Investor or AI” means any person who fulfills the applicable eligibility criteria and is granted a certificate of accreditation by an Accreditation Agency. Provided that the Central Government and the State Governments, developmental agencies set up under the aegis of the Central Government or the State Governments, funds set up by the Central Government or the State Governments, qualified institutional buyers as defined under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, Category I foreign portfolio investors, sovereign wealth funds and multilateral agencies and any other entity as may be specified by SEBI from time to time, shall deemed to be an accredited investor and may not be required to obtain a certificate of accreditation.
“Accreditation Agency” means a subsidiary of a recognized stock exchange or a subsidiary of a depository or any other entity as may be specified by SEBI from time to time.
The following entities are currently notified as Accreditation Agency by SEBI:
“Large Value Accredited Investor” means an Accredited Investor who has entered into an agreement with the Portfolio Manager for a minimum investment of INR 10 crores.
SEBI (Portfolio Managers) Regulations, 2020
Particulars | Applicability |
---|---|
Contents of agreement specified under Schedule IV of SEBI (Portfolio Managers) Regulations, 2020 shall not apply to the agreement between the Portfolio Manager and Large Value Accredited Investor | Large Value Accredited Investor |
The requirement of minimum investment of INR 50 lakhs per client shall not apply | Accredited Investor |
The Portfolio Manager may offer discretionary or non-discretionary or advisory services for investment up to 100% of the assets under management in unlisted securities subject to the terms agreed between the client and the Portfolio Manager | Large Value Accredited Investor |
The quantum and manner of exit load applicable to the client as provided under the PMS regulations shall not apply and shall be governed through bilaterally negotiated contractual terms | Large Value Accredited Investor |
Eligibility Criteria for Accredited Investors
The following persons shall be eligible to be considered as Accredited Investors:
Category | Criteria |
---|---|
Individual |
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 |
Hindu Undivided Family (HUF) | |
Family Trust | |
Sole Proprietorship | |
Body Corporate | Net worth greater than or equal to INR 50 Crore |
Trust (other than Family Trust) | Net worth greater than or equal to INR 50 Crore |
Partnership Firm (under Indian Partnership Act, 1932) | Each partner independently meets the eligibility accreditation criteria for accreditation |
The eligibility criteria shall be reckoned as follows:
1. Net Worth Calculation
Category | Particulars |
---|---|
Individual | The value of the primary residence shall not be considered for calculation of net worth |
Karta of HUF | The value of the primary residence shall not be considered for calculation of net worth |
Sole Proprietor | The value of the primary residence shall not be considered for calculation of net worth |
Body Corporate | Net worth shall be calculated as: Net worth = (Capital + free reserves) – (Accumulated losses + deferred expenditure not written off) |
Trustee | Net worth shall be calculated as: Net worth = (Book value of all assets, other than intangible assets) – (Book value of total liabilities) |
2. In case of investments held jointly by more than one individual, the following conditions shall apply for eligibility as Accredited Investor:
(i) Where the joint holders are parent(s) & child(ren), at least one person should independently fulfill the eligibility criteria for Accredited Investor.
(ii) Where the joint holders are spouses, their combined income/net worth should meet the eligibility criteria for Accredited Investor.
3. For Body Corporates and Trusts, eligibility criteria for accreditation shall be considered on the basis of the following:
(i) Financial information as per statutory audit; or
(ii) Financial information as per audit by the statutory auditor as on a date during the financial year in which application is made (if furnished).
4. 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.
(i) If eligibility criteria are met for preceding 1 year, then accreditation shall be valid for 1 year from the date of such accreditation.
(ii) If eligibility criteria are met for preceding 3 years consistently, then accreditation shall be valid for 2 years from the date of such accreditation.
(a) An Accredited Investor who withdraws ‘Consent’ after availing a lower ticket size must increase investment to the minimum INR 50 Lakhs for PMS within the timeframe specified in the agreement.
(b) If an investor who has availed concessions to the regulatory framework withdraws the ‘Consent’ furnished to the Portfolio Manager before the expiry of the client agreement, the investments already made shall be ‘grandfathered’ — i.e., such investments shall continue to be reckoned as investments by an Accredited Investor. From the date of withdrawal of consent, any further transaction shall comply with the applicable regulatory framework.
(c) The client agreement shall, inter-alia, provide the modalities for withdrawal of ‘Consent’ and the consequences of the investor withdrawing the ‘Consent’.
Investor Category | Fees and Charges (Rs.)* | ||
---|---|---|---|
BASL Processing Charges | BASL Certification Fees | ||
For One Year Tenure | For Two Year Tenure | ||
Individuals, HUFs, Family Trusts and Sole Proprietorships | Rs. 5,000/- | Rs. 5,000/- | Rs. 9,500/- |
Partnership Firms | Rs. 5,000/- | Rs. 10,000/- | Rs. 19,000/- |
Trusts (other than family trusts) | Rs. 5,000/- | Rs. 15,000/- | Rs. 28,500/- |
Body Corporates | Rs. 5,000/- | Rs. 15,000/- | Rs. 28,500/- |
*Plus taxes as applicable. Both processing and certification fees are to be paid at the time of application. Processing charges are non-refundable.
Visit www.bseasl.com for user manual and updates.
Investor Category | Fees and Charges (Rs.)* | ||
---|---|---|---|
CVL Processing Charges | CVL Certification Fees | ||
For One Year Tenure | For Two Year Tenure | ||
Individuals, HUFs, Family Trusts and Sole Proprietorships | Rs. 5,000/- | Rs. 5,000/- | Rs. 9,500/- |
Partnership Firms | Rs. 5,000/- | Rs. 10,000/- | Rs. 19,000/- |
Trusts (other than family trusts) | Rs. 5,000/- | Rs. 15,000/- | Rs. 28,500/- |
Body Corporates | Rs. 5,000/- | Rs. 15,000/- | Rs. 28,500/- |
Note:
The investors are advised to visit www.aia.cvlindia.com for etailed user manual and updates notified by CVL from time to time.
Document Type | Sole Individual | Sole Proprietorship | Individual-Hindu Undivided Family | Joint- parent and children |
---|---|---|---|---|
Copy of PAN Card of applicant/signatory | ||||
Copy of Aadhaar Card | ||||
Valid passport | ||||
Copy of Registered Trust Deed | ||||
Certificate of Incorporation | ||||
Partnership deed | ||||
Copy of Income Tax Return for previous three year | ||||
Copies of audited Financial statements of three years preceding the date of application | ||||
Audited financial statement prepared by statutory auditor for the current date/period( Optional) | ||||
Certificate from practicing chartered accountant stating networth for previous three financial years. | ||||
Certificate from practising chartered accountant stating networth as on date of application (optional) | ||||
Proof of ready reckoner rate applicable to real estate considered for calculation of networth | ||||
Copy of demat account statement | ||||
Statement of assets and liabilities of the Trust for the preceding three years. | ||||
confirmation that it has not been restricted from accessing the securities market by the country of jurisdiction where it is incorporated. | ||||
UNDERTAKINGS- not a willful defaulter | ||||
not a fugitive offender | ||||
UNDERTAKINGS-not debarred from securities market as on the date of application (for domestic) | ||||
UNDERTAKINGS-The submissions made to the Accreditation Agency are true and | ||||
The Applicant or its promoters/partners or directors are not wilful defaulters | ||||
The promoters/partners or directors of the applicant are not fugitive offenders | ||||
The applicant/ its beneficiaries/Trustees are not wilful defaulters | ||||
The beneficiaries of the Applicant or its Trustee(s) are not fugitive economic offenders |
Document Type | Joint-Spouses | Trust-Family trust | Trust-Other trust | Firm- Partnership firm | Firm- Body Corporate |
---|---|---|---|---|---|
Copy of PAN Card of applicant/signatory | |||||
Copy of Aadhaar Card | |||||
Valid passport | |||||
Copy of Registered Trust Deed | |||||
Certificate of Incorporation | |||||
Partnership deed | |||||
Copy of Income Tax Return for previous three year | |||||
Copies of audited Financial statements of three years preceding the date of application | |||||
Audited financial statement prepared by statutory auditor for the current date/period( Optional) | |||||
Certificate from practicing chartered accountant stating networth for previous three financial years. | |||||
Certificate from practising chartered accountant stating networth as on date of application (optional) | |||||
Proof of ready reckoner rate applicable to real estate considered for calculation of networth | |||||
Copy of demat account statement | |||||
Statement of assets and liabilities of the Trust for the preceding three years. | |||||
confirmation that it has not been restricted from accessing the securities market by the country of jurisdiction where it is incorporated. | |||||
UNDERTAKINGS- not a willful defaulter | |||||
not a fugitive offender | |||||
UNDERTAKINGS-not debarred from securities market as on the date of application (for domestic) | |||||
UNDERTAKINGS-The submissions made to the Accreditation Agency are true and | |||||
The Applicant or its promoters/partners or directors are not wilful defaulters | |||||
The promoters/partners or directors of the applicant are not fugitive offenders | |||||
The applicant/ its beneficiaries/Trustees are not wilful defaulters | |||||
The beneficiaries of the Applicant or its Trustee(s) are not fugitive economic offenders |
Document Type | Foreign- Sole Individual | Foreign- Sole proprietorship | Foreign-parent and children | Foreign- Joint-spouses |
---|---|---|---|---|
Copy of PAN Card of applicant/signatory | ||||
Copy of Aadhaar Card | ||||
Valid passport | ||||
Copy of Registered Trust Deed | ||||
Certificate of Incorporation | ||||
Partnership deed | ||||
Copy of Income Tax Return for previous three year | ||||
Copies of audited Financial statements of three years preceding the date of application | ||||
Audited financial statement prepared by statutory auditor for the current date/period( Optional) | ||||
Certificate from practicing chartered accountant stating network for previous three financial years. | ||||
Certificate from practising chartered accountant stating network as on date of application (optional) | ||||
Proof of ready reckoner rate applicable to real estate considered for calculation of networth | ||||
Copy of demat account statement | ||||
Statement of assets and liabilities of the Trust for the preceding three years. | ||||
confirmation that it has not been restricted from accessing the securities market by the country of jurisdiction where it is incorporated. | ||||
UNDERTAKINGS- not a willful defaulter | ||||
not a fugitive offender | ||||
UNDERTAKINGS-not debarred from securities market as on the date of application (for domestic) | ||||
UNDERTAKINGS-The submissions made to the Accreditation Agency are true and | ||||
The Applicant or its promoters/partners or directors are not wilful defaulters | ||||
The promoters/partners or directors of the applicant are not fugitive offenders | ||||
The applicant/ its beneficiaries/Trustees are not wilful defaulters | ||||
The beneficiaries of the Applicant or its Trustee(s) are not fugitive economic offenders |
Document Type | Foreign-family trust | Foreign- other trust | Foreign-Partnership firm | Foreign- Body corporate |
---|---|---|---|---|
Copy of PAN Card of applicant/signatory | ||||
Copy of Aadhaar Card | ||||
Valid passport | ||||
Copy of Registered Trust Deed | ||||
Certificate of Incorporation | ||||
Partnership deed | ||||
Copy of Income Tax Return for previous three year | ||||
Copies of audited Financial statements of three years preceding the date of application | ||||
Audited financial statement prepared by statutory auditor for the current date/period( Optional) | ||||
Certificate from practicing chartered accountant stating networth for previous three financial years. | ||||
Certificate from practising chartered accountant stating networth as on date of application (optional) | ||||
Proof of ready reckoner rate applicable to real estate considered for calculation of networth | ||||
Copy of demat account statement | ||||
Statement of assets and liabilities of the Trust for the preceding three years. | ||||
confirmation that it has not been restricted from accessing the securities market by the country of jurisdiction where it is incorporated. | ||||
UNDERTAKINGS- not a willful defaulter | ||||
not a fugitive offender | ||||
UNDERTAKINGS-not debarred from securities market as on the date of application (for domestic) | ||||
UNDERTAKINGS-The submissions made to the Accreditation Agency are true and | ||||
The Applicant or its promoters/partners or directors are not wilful defaulters | ||||
The promoters/partners or directors of the applicant are not fugitive offenders | ||||
The applicant/ its beneficiaries/Trustees are not wilful defaulters | ||||
The beneficiaries of the Applicant or its Trustee(s) are not fugitive economic offenders |