In a series of amendments to regulations related to AIFs and PMS, SEBI has come out with the parameters for qualifying as accredited investors.
With this, any individual, HUF, family trust or sole proprietor with annual income of at least Rs.2 crore can become accredited investors.
Here are other criteria to become an accredited investor:
- Net worth of at least Rs.7 crore including Rs.3.75 crore of financial assets
- Annual income of Rs.1 crore and minimum net worth of Rs.5 crore including Rs.2 crore in financial assets
- For body corporates and trusts, net worth requirement is Rs.50 crore
- Each partner has to meet eligibility criteria separately to become accredited investors
Accredited investors are those investors who are assumed to have a better understanding of risks and returns associated with financial products. These investors have a higher financial capacity and a greater ability to absorb loss.
Among some key benefits to Accredited Investors are:
- Relaxation in minimum ticket size for such investors in AIFs and PMSs
- Can seek relaxation in investment norms if minimum investment amount in AIF is Rs.70 crore. Such a requirement is Rs.10 crore in PMS. These investors will be called large accredited investors
- Can negotiate terms and conditions on fees and services from RIAs
Investors who want to qualify as accredited investors will have to get a license from accreditation agencies, which SEBI is yet to finalize. The regulator said it could allow subsidiaries of depositories and stock exchanges to become accreditation agencies.
