SEBI Lays Out Framework For Accredited Investors Willing To Invest in Startups
The framework has been created to facilitate listing of start-ups or new-age ventures in sectors like e-commerce, data analytics.
The Securities and Exchange Board of India came out with framework for accreditation of investors seeking to invest in startups that would be listed on the Innovators Growth Platform.
The IGP, earlier known as Institutional Trading Platform, has been created to facilitate listing of startups or new-age ventures in sectors such as e-commerce, biotechnology and data analytics.
In a circular, the market watchdog provided framework including eligibility criteria and procedure to be recognised as an accredited investor and also mentioned the validity of accreditation.
Regarding the eligibility, SEBI said "any individual with a total gross income of Rs 50 lakh annually and who has a minimum liquid net worth of Rs 5 crore or any corporate with net worth of Rs 25 crore" is eligible to be an accredited investor.
While laying down the procedure for accreditation, the market regulator said investors having a demat account with a depository needs to make an application to the exchanges or depositories in the prescribed manner for recognition as an accredited investor.
Exchanges and depositories shall be responsible for verification and maintenance of the accredit investors data, SEBI added.
Accreditation shall be valid for three years from the date of issuance unless the accredit investor becomes ineligible due to change in its financial status and in such cases, the accredited investor needs to inform about its ineligibility to the exchange or depository.
Moreover, the merchant bankers shall ensure due diligence with regard to eligibility of accredited investors at the time of application by a company for listing on IGP in addition to ensuring that their holding in the company desirous of listing on the platform is in accordance with the Issue of Capital and Disclosure Requirements norms.