Agencies that issue accreditation to investors can now solely rely on the information provided by the applicant, in their know-your-customer documentation and financial information, according to a circular issued by SEBI.
Earlier, the agencies had to verify that the applicant is "fit and proper" to participate in the securities market, including the absence of any convictions or restraint orders, not being a wilful defaulter, etc.
Accreditation agencies are also KYC Registration Agencies (KRAs) and accredited investors are usually high networth and more financially sophisticated entities that are allowed to invest in securities that are not registered with the market regulator and that therefore may be high-risk instruments.
Also read: Engg firms's promoters reduced shareholding to a fourth without disclosures, fined Rs 16 lakh
A circular issued by the Securities and Exchange Board of India (SEBI) on December 18, to simplify the grant of accreditation to investors, stated, "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."
The accreditation certificate now issued by the agencies will carry 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 onboarding them as their clients.”
The accreditation agencies can now also access applicants' KYC documents that are available with them or from the database of other KRAs, the latest circular added.
The circular also revised the validity period of the certificate.
If the applicant meets the eligibility criteria for the preceding financial year, the accreditation certificate issued shall be valid for two years from the date of issuance. Earlier, the accreditation was valid for one year.
If the applicant meets the eligibility criteria in each of the preceding two financial years, the accreditation certificate issued shall be valid for three years from the date of issuance. Earlier, the accreditation was valid for a maximum of two years.
Also read: Mutual funds are not permissible investment for Cat III AIFs: Sebi's informal guidance
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 of the date of application, the accreditation certificate issued shall be valid for two years from the date of issuance, stated the circular.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
