In brief
On 5 November 2026, SEBI issued a circular prescribing the operational details of a new regulatory framework for Accredited Investors. This circular was preceded by a consultation paper dated 13 August 2026, and approval by SEBI board of the proposals in such consultation paper. In this article, we have reviewed the key features of the new regulatory framework for Accredited Investors rolled out by SEBI.
On 13 August 2026, SEBI issued a consultation paper (‘Consultation Paper’) inviting public comments on proposals to modify and improve its current regulatory framework for accredited investors. Pursuant to the Consultation Paper, SEBI’s Board, at a meeting held on 24 September 2026, approved a number of changes to the regulatory framework for accredited investors. As per SEBI’s press release dated 24 September 2026 (‘Press Release’), some of the key changes to the regulatory framework for accredited investors approved by SEBI’s Board were:
The manager of an AIF, SIF or PMS may determine and record an investor’s accredited status as part of onboarding, or during the tenure of an ongoing scheme. Accreditation by a manager would be valid for three years from the assessment date.
SEBI has retained the existing independent Accreditation Agency route in parallel with the manager-led accreditation option. Investors may continue to obtain a portable certificate from a recognised Accreditation Agency rather than be assessed separately by a manager.
The assessment would use the latest Income Tax Returns (‘ITR’), a CA net-worth certificate not older than six months, or recent eCAS/broker statements or a CA certificate for securities-market assets.
Accreditation can be based on the investor’s securities-market assets. Under this route, individuals, HUFs, family trusts and sole proprietorships should have securities-market assets worth at least ₹5 crore and a body corporate should have securities-market assets worth ₹20 crore.
New regulatory framework for Accredited Investors – Key features
On 5 November 2026, SEBI issued a circular (‘Circular’) prescribing the operational details of the regulatory framework for Accredited Investors. The key features of the new regulatory framework for Accredited Investors are as follows:
A determination made by a Manager is recognised across Managers of the same Group for AIFs, SIFs and portfolio management services during the validity period. ‘Group’ has the meaning assigned to ‘corporate group’ under the AIF Regulations. An Investment Adviser or Research Analyst shall not determine accredited status independently, but may rely on a valid determination made by a Manager in its Group.
A certificate of accreditation issued by a recognised Accreditation Agency shall be valid for three years from the date of accreditation. An investor who is an Accredited Investor at the time of onboarding into a scheme shall continue to be reckoned as an Accredited Investor for the remaining life of that scheme.
The minimum qualifying securities market exposure shall be ₹ 5 crore for an individual, Hindu Undivided Family, family trust or sole proprietorship, and ₹ 20 crore for a body corporate or a trust other than a family trust. Qualifying exposure includes securities held in dematerialised form, mutual fund investments held through mutual fund folios, unlisted securities held in dematerialised form, investment in the overseas securities market, and investments under the National Pension System.
A Manager shall maintain all records, supporting documents and verification evidence relied upon for determining accredited status for at least five years from the date of accreditation or until five years after the investor ceases to be an investor in any scheme managed by the Manager, whichever is later. The records shall be made available for inspection as and when sought.
Validity period of accreditation – comparison between old and new rules
Until now, as per Paragraphs 10.4.1 and 10.4.2 of the Master Circular, the validity of Accreditation was either two or three years. If the applicant met the eligibility criteria for preceding one financial year, the accreditation certificate issued was valid for a period of two years from the date of issuance. If the applicant met the eligibility criteria in each of the preceding two financial years, the accreditation certificate issued was valid for a period of three years from the date of issuance.
In the context of conversion of an AIF or a scheme of an AIF into an AI-only scheme or LVF scheme, Paragraph 2.6.2 of the Master Circular states that if an investor is an AI at the time of on-boarding into an AIF scheme, he/ she shall be reckoned as an AI through the life of the scheme, even if he/ she were to lose such status in the interim. However, this stipulation does not apply to a newly set up AI-only scheme or LVF scheme.
With effect from 5 November 2026, once an investor is admitted into a scheme as an AI, either on the basis of a certificate of accreditation issued by a recognised Accreditation Agency or on the basis of the determination made by the Manager of that scheme, that investor will be treated as an AI for the entire term of the scheme. If an investor, who has been admitted into a scheme as an AI on the basis of the determination made by the Manager of that scheme wishes to invest in another scheme managed by the same Manager, such Manager has to make a fresh determination of the status of such investor. However, if such investor is on-boarded on the basis of a certificate of accreditation issued by a recognised Accreditation Agency, such investor can invest in any other scheme managed by the same Manager or any other Manager on the strength of such certificate of accreditation, provided it is during the three-year period of validity of such certificate.
Safeguards to prevent any conflict of interest
SEBI had proposed (in the Consultation Paper) the following safeguards to prevent any conflict of interest arising on account of the manager of an AIF accrediting investors in such AIF:
(i) Managers have to put in place a formal accreditation policy;
(ii) Records relating to accreditation be retained for a minimum period, to be prescribed by SEBI;
(iii) Accreditation processes be subjected to periodic internal audit and compliance review; and
(iv) Managers obtain annual certification from an independent auditor confirming compliance with the accreditation requirements.
In the Circular, SEBI has elaborated on the abovementioned safeguards. Every Manager undertaking accreditation shall adopt an accreditation policy specifying:
(i) conflict of interest controls, including separation of the accreditation function from the business development and distribution function;
(ii) an escalation and grievance redressal process for resolving investor concerns arising from the determination of accredited status; and
(iii) record retention infrastructure, covering inter alia data privacy and cybersecurity, so that the confidentiality of the information submitted by investors is protected.
The Circular also requires documentation of the accreditation decision to enable independent review and integrates periodic internal audit into existing audits. However, the Circular has not mandated a separate annual independent auditor certification, though the Consultation Paper mentioned the same.
Verification of eligibility criteria
The Circular also lists out the various documents required to be provided by investors to the Manager or the Accreditation Agency to evidence that the prescribed eligibility criterion (based on income, net worth or securities market exposure) has been met. The Circular provides a clear, tabulated list of acceptable documents for each eligibility criterion (including the new securities market exposure route), which was not detailed to this extent in the Consultation Paper.
Accreditation of LLPs
As per the Press Release, SEBI’s Board had decided that LLPs will be eligible for accreditation where each partner is an Accredited Investor, in line with the existing framework for partnership firms. This is reflected in Paragraph 8.1 of the Circular. Paragraph 8.2 of the Circular further says that where a partner is itself a body corporate, including another LLP, a firm or a trust, that partner shall independently satisfy the eligibility criteria applicable to it.
Accreditation of PROIs
As per the Press Release, SEBI’s Board had decided that every ‘person resident outside India’ (‘PROI’), including all Foreign Portfolio Investors, is deemed to be an Accredited Investor. This is reflected in Paragraph 9.1 of the Circular. Paragraphs 9.2 and 9.3 of the Circular further say that the Manager shall record the basis on which the investor has been identified as a Person Resident Outside India, and that deemed Accredited Investor status shall not dilute the obligations of an AIF and its Manager, as reporting entities under the Prevention of Money-laundering Act, 2002, to conduct client due diligence, identify beneficial owners and comply with applicable requirements relating to source of funds.
[The authors are Partner and Associate, respectively, in Corporate and M&A practice at Lakshmikumaran & Sridharan Attorneys]
The Consultation Paper can be accessed through available here
The Press Release can be accessed through available here
The Circular can be accessed through available here
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