Additionally, it has been proposed to facilitate the onboarding of accredited investors based on first-level due diligence by the manager of an AIF.
The Securities and Exchange Board of India (Sebi) has sought public comments till July 8 on the proposals.
In its consultation paper, Sebi has proposed that “eligibility criteria for accreditation agencies may be expanded such that all KRAs (KYC registration agencies) are eligible to function as accreditation agencies, as against only the subsidiaries of stock exchange and depositories as per current eligibility”.
Under the current regulatory framework, only subsidiaries of stock exchanges (with certain conditions) and depositories are eligible to become an accreditation agency. Presently, there are two accreditation agencies operational in the securities market -CDSL Ventures Ltd, a subsidiary of CDSL, and NSDL Data Management Ltd, an arm of NSDL. Both entities are also registered as KYC registration agencies (KRAs) with Sebi.
There are five KRAs registered with the market regulator.Also, the watchdog believes that it would be an opportune time now to make this transition since both the currently operational accreditation agencies are KRAs and there would be no disruption to the existing accreditation ecosystem.The move is also expected to increase the number of accreditation agencies and foster more competition among them to facilitate cost-efficient servicing by accreditation agencies, Sebi said.
On faster onboarding of accredited investors, Sebi suggested allowing AIFs to on-board investors as accredited investors on the basis of the AIF managers’ due diligence.
However, only after receipt of the respective accreditation certificate from an accreditation agency, any money should be received by the AIF from an investor.
“Any commitment made by such provisionally on-boarded investor shall not be included in the calculation of corpus of the scheme until such investor obtains accreditation certificate from an accreditation agency. Schemes of AIFs shall receive funds from such investors only after they obtain an accreditation certificate from an accreditation agency,” Sebi suggested.
“Schemes of AIFs that are close-ended shall not raise any money from such investors and their respective contribution agreements shall be considered null and void if they fail to obtain accreditation certificate prior to final close,” it added.
Presently, the manager of an AIF on-boards an investor as an accredited investor only after the investor obtains an accreditation certificate. The commitment given by such accredited investors is included in the contribution agreement executed between the investor and the AIF.
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