Sebi simplifies the requirements for granting accreditation to AIF investors

Markets regulator Securities and Exchange Board of India (SEBI) on Thursday announced further simplification of the accredited investor framework to ease operational bottlenecks for alternative investment funds (AIFs) while maintaining prudential safeguards.Under the revised norms, Sebi has given AIF investment managers the option to finalize and execute contribution agreements with investors even before the latter receive formal accreditation certificates from recognized bodies. However, any commitment from such investors will not be included in the corpus of the program until accreditation is obtained, and funds cannot be accepted until the certificate is issued. The regulator said this ensures that important prudential norms related to corpus size are not compromised.

Sebi also said that AIFs will receive money from these investors only after obtaining an accreditation certificate from an accreditation agency.The securities market watchdog has also relaxed documentation requirements for accreditation based on asset criteria. The previous mandate to submit a detailed asset breakdown as an attachment to the asset certificate has been abolished. Furthermore, it has been clarified that it is optional for a chartered accountant to declare the exact net worth as long as the certificate confirms that the investor meets the prescribed threshold.

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The regulator has further directed managers, sponsors and managers of AIFs to ensure compliance with these revised provisions in their compliance test reports.

The above adjustments have been made through a circular issue that came into effect today. This move is part of Sebi’s drive to improve ease of doing business.

The capital markets regulator on Thursday allowed stockbrokers to undertake activities within the regulatory framework of other financial regulators. The initiative aimed at improving ease of doing business is part of Sebi’s revamped regulations for stockbrokers announced yesterday and marks a comprehensive overhaul of norms that were more than 30 years old.

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