Articles · 6 November 2026

SEBI Updates Framework for Accredited Investors With Manager-Led Verification

4 min read

Regulatory Mechanics of Manager-Led Accreditation

The Securities and Exchange Board of India released a circular on November 5, 2026, outlining the implementation modalities for amendments made to the Alternative Investment Funds Regulations, 2012. These provisions establish an optional manager-led route where eligible entities can determine and record an investor's accredited status directly during onboarding or scheme tenure. For the purposes of this framework, the term manager encompasses alternative investment fund managers, asset management companies of specialized investment funds, and portfolio managers as defined under their respective SEBI regulations.

Under the new circular, a determination made by a manager remains recognized across other managers within the same corporate group for alternative investment funds, specialized investment funds, and portfolio management services. Furthermore, investment advisers and research analysts are prohibited from determining accredited status independently, though they are permitted to rely upon a valid determination previously established by a manager within their corporate group.

Management Directives and Operational Mandates

According to the regulatory text issued under the authority of Deputy General Manager Anshul Jagdish Goyal, the primary objective of these amendments is to ease and expedite the process of accreditation for market participants. The optional manager-led route operates alongside the established accreditation agency mechanism, ensuring that investors furnishing a valid certificate from a recognized agency will continue to be accommodated without facing fresh determinations during the certificate's validity period.

To ensure accountability under the manager-led route, the circular mandates that every participating manager adopt a formal accreditation policy. This policy must incorporate explicit conflict-of-interest controls to separate the accreditation function from business development and distribution, establish an escalation and grievance redressal process for investor concerns, and institute robust record retention infrastructure protecting data privacy and cybersecurity.

Editorial Examination of Framework Scope and Validity

The establishment of a three-year validity period for manager-determined accreditation creates standard alignment with existing certificates issued by recognized agencies. This uniform duration provides administrative predictability for both investors and fund managers, while the rule allowing accredited investors to retain their status for the remaining life of an ongoing scheme protects existing participants from disruptive mid-term re-qualification requirements.

Editorial interpretation suggests that while the manager-led framework intends to reduce onboarding friction, the accompanying requirements for rigorous documentation, independent reviewability, and periodic internal audits impose substantial administrative obligations. Managers must carefully balance the commercial objective of faster onboarding against the strict governance and record retention mandates enforced by the regulator.

Investor Inquiries Regarding Exposure Thresholds and Residency

Q: What are the minimum qualifying securities market exposure thresholds prescribed for individuals and corporate bodies under the updated accreditation framework? A: The circular specifies that the minimum qualifying securities market exposure must be INR 5 crore for an individual, Hindu Undivided Family, family trust, or sole proprietorship, and INR 20 crore in the case of a body corporate or a trust other than a family trust.

Q: How does the framework treat individuals or entities categorized as Persons Resident Outside India regarding accreditation certificates? A: The regulatory text states that a Person Resident Outside India, as defined under the Foreign Exchange Management Act of 1999, shall be deemed to be an accredited investor and is explicitly exempted from obtaining a certificate of accreditation or undergoing manager-led determination.

Compliance Risks and Procedural Uncertainties

A notable risk highlighted by the circular's stringent operational safeguards is the potential compliance burden placed on managers undertaking accreditation. Managers are held fully accountable for ensuring compliance with eligibility criteria and must maintain all verification evidence for at least five years or until five years after an investor exits all managed schemes, whichever is later, creating long-term document retention obligations.

Another procedural uncertainty relates to group boundaries and portability. Because manager-determined status is confined to managers within the same corporate group and must be determined afresh whenever an investor is onboarded by an external manager, cross-group client transitions could encounter friction, preventing seamless statewide or nationwide portability across unaffiliated asset managers.

Sources

• Review of the framework for Accredited Investors
• SEBI circular reviewing the Accredited Investor framework

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