SEBI Revises the Framework for Accredited Investors: Key Changes and Regulatory Implications
The Securities and Exchange Board of India (“SEBI”), through its circular dated November 5, 2026, titled Review of the Framework for Accredited Investors, has introduced significant changes to the framework governing the accreditation of investors under the SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”). The circular follows the amendments to the AIF Regulations notified on October 15, 2026, and seeks to streamline the accreditation process, reduce procedural requirements and facilitate investor onboarding.
The revised framework introduces manager-led accreditation, clarifies the validity of accreditation, expands the scope of eligible securities market exposure and provides specific provisions for the accreditation of Limited Liability Partnerships and Persons Resident Outside India.
1. Introduction of Manager-Led Accreditation
One of the most significant changes is the introduction of manager-led accreditation as an alternative to accreditation through a recognised Accreditation Agency.Under the revised framework, the Manager of an AIF may determine and record an investor’s accredited status either at the time of onboarding or during the tenure of a scheme, subject to verification of the eligibility criteria prescribed under the AIF Regulations. For this purpose, the term “Manager” also includes the asset management company of a Specialised Investment Fund (“SIF”) and a portfolio manager.
An accreditation determination made by a Manager will be recognised across Managers belonging to the same corporate group for AIFs, SIFs and portfolio management services during its validity period. However, where an investor is onboarded by a Manager outside the same group, a fresh determination will be required.The Manager must record the accreditation decision and communicate the same to the investor in writing, specifying the date of accreditation and its validity period.Importantly, manager-led accreditation is optional and does not replace the existing Accreditation Agency mechanism. Where an investor furnishes a valid certificate issued by a recognised Accreditation Agency, the Manager must rely on such certificate and cannot undertake a fresh determination during its validity.
2. Validity and Continuity of Accreditation
The circular prescribes a validity period of three years from the date of accreditation, irrespective of whether accreditation is undertaken by a Manager or a recognised Accreditation Agency.A significant clarification is that an investor who qualifies as an Accredited Investor at the time of onboarding into a scheme will continue to be recognised as such for the remaining life of that scheme, even if the accreditation period expires during its tenure. Further, certificates issued before the applicability of the circular will continue to remain valid for their unexpired validity period.
This provision provides continuity of accredited status for existing investments and avoids the need for repeated accreditation solely on account of the expiry of the three-year validity period during the life of a scheme.
3. Securities Market Exposure: Eligible Investments and Thresholds
The circular specifies the minimum securities market exposure required for accreditation as Rs.5 crore for individuals, Hindu Undivided Families, family trusts and sole proprietorships, and Rs.20 crore for body corporates and trusts other than family trusts.
The investments eligible for determining securities market exposure include:
• Securities held in dematerialised form;
• Mutual fund investments held through mutual fund folios;
• Unlisted securities held in dematerialised form;
• Investments in overseas securities markets; and
• Investments under the National Pension System.
For securities held in dematerialised form, the value reflected in the electronic Consolidated Account Statement (“eCAS”) as on the statement date will be considered. In respect of unlisted securities and overseas investments not valued in the eCAS statement, the applicant must furnish a certificate from a practising Chartered Accountant specifying the nature of securities, valuation date and value.The express inclusion of unlisted securities, overseas investments and NPS investments provides greater flexibility in assessing an investor’s securities market exposure.
4. Compliance Obligations of Managers
While manager-led accreditation simplifies the process, it places corresponding responsibility on Managers to ensure proper verification and compliance.Managers undertaking accreditation must adopt a formal accreditation policy addressing conflict of interest controls, separation of accreditation functions from business development and distribution functions, grievance redressal mechanisms, and record retention infrastructure, including data privacy and cybersecurity safeguards.
They must also maintain supporting documents and verification records 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. Periodic internal audits and compliance reviews of the accreditation process are also required. Further, every accreditation decision, the eligibility criterion relied upon and the supporting verification must be documented in a manner that enables independent review.
5. Accreditation of LLPs and Persons Resident Outside India
The circular specifically clarifies the eligibility of Limited Liability Partnerships (“LLPs”). An LLP incorporated under the Limited Liability Partnership Act, 2008, will qualify as an Accredited Investor where each of its partners independently satisfies the applicable eligibility criteria as on the date of determination. Where a partner is itself a body corporate, another LLP, a firm or a trust, such partner must independently satisfy the eligibility criteria applicable to it.
The circular also provides that Persons Resident Outside India (“PROIs”), as defined under the Foreign Exchange Management Act, 1999, will be deemed Accredited Investors without being required to obtain an accreditation certificate or undergo manager-led accreditation. However, the Manager must record the basis for identifying the investor as a PROI.This deemed status does not exempt AIFs and their Managers from their obligations under the Prevention of Money-laundering Act, 2002. Client due diligence, identification of beneficial owners and applicable source-of-funds verification requirements will continue to apply.
Conclusion
The revised framework represents a significant step towards simplifying investor accreditation in the Indian securities market. The introduction of manager-led accreditation, recognition of accreditation across Managers within the same corporate group and deemed accreditation of PROIs are expected to reduce procedural requirements and facilitate more efficient investor onboarding.
At the same time, the framework places greater responsibility on Managers in relation to eligibility verification, internal controls, record maintenance and investor data protection. AIF Managers should accordingly review their existing onboarding procedures and compliance policies to ensure alignment with the revised requirements.The circular came into force with immediate effect from November 5, 2026.
