Simplification of requirements for grant of accreditation to investors
Summary
This circular simplifies the accreditation framework for investors by allowing Accreditation Agencies to utilize existing KYC data and revising certificate validity periods. It mandates that accreditation certificates include a disclaimer clarifying that such accreditation does not exempt market intermediaries from their own due diligence obligations. The document also updates Annexures to specify eligibility criteria based on income and net worth, alongside the procedural requirements for obtaining accreditation. Part 2 outlines the procedural requirements for investors to avail accreditation benefits, including mandatory undertakings and verification steps. It details the flexibility for Accredited Investors to withdraw consent and the specific consequences regarding investment thresholds and grandfathering of existing holdings. Finally, it lists the documentary evidence required for accreditation applications through Annexure 2.
Text
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.
The Accreditation agencies shall grant accreditation solely based on the KYC and the financial information of the applicants.
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.
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.
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.
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.
Individuals, HUFs, Family Trusts and Sole Proprietorships... Annual Income ≥ INR 2 Crore; OR Net Worth ≥ INR 7.5 Crore... OR Annual Income ≥ INR 1 Crore + Net Worth ≥ INR 5 Crore...
Partnership Firms set up under the Indian Partnership Act, 1932 in which each partner independently meets the criteria for accreditation.
Trusts (other than family trusts) with net worth greater than or equal to INR 50 Crore. Body Corporates with net worth greater than or equal to INR 50 Crore.
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.
Where the joint holders are parent(s) & child(ren), at least one person should independently fulfil the eligibility criteria for AI. Where the joint holders are spouses, their combined income/ net worth should meet the eligibility criteria for AI.
Net worth = (Capital + free reserves) - (Accumulated losses + deferred expenditure not written off)
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Source: SecMarx — Simplification of requirements for grant of accreditation to investors. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.