SEBI Accredited Investor Circular of 5 November 2026: Manager-Led Accreditation, Three-Year Validity and the Rs 5 Crore Exposure Test
Quick Summary
- What is new: SEBI Circular HO/19/34/11(6)2026-AFD-POD1/I/25244/2026 dated 5 November 2026 sets the modalities for the accredited investor changes notified on 15 October 2026. It came into force immediately.
- Manager-led accreditation: the manager of an AIF, the asset management company of a Specialized Investment Fund or a portfolio manager may now determine accredited status. This is an additional, optional route; accreditation agencies continue.
- Validity: three years from the date of accreditation on both routes. An investor accredited at onboarding into a scheme stays accredited for the remaining life of that scheme.
- Securities market exposure: Rs 5 crore for an individual, HUF, family trust or sole proprietorship, and Rs 20 crore for a body corporate or a trust other than a family trust, counted across demat holdings, mutual fund folios, unlisted demat securities, overseas investments and NPS.
- Persons resident outside India: deemed accredited, with no certificate and no manager-led accreditation. The Manager records the basis, and PMLA due diligence is not diluted.
The SEBI accredited investor circular of 5 November 2026 answers what our note on the AIF (Third Amendment) Regulations left open. Regulation 2(1)(ab) of the SEBI (Alternative Investment Funds) Regulations, 2012 left the accrediting entities, the manner of accreditation and the meaning of securities market exposure to SEBI. This circular now specifies them, and SEBI has written the same text into Chapter 10 of the Master Circular for AIFs, last updated on 5 November 2026. This note is for fund managers, CAs who certify investors, and founders raising from angel funds.
Who can do manager-led accreditation under the SEBI accredited investor circular?
Under para 3.1, a Manager may determine and record an investor’s accredited status at onboarding or during the tenure of a scheme, after verifying that the investor meets the eligibility criteria. For this purpose, “Manager” means the manager of an AIF, the asset management company of a Specialized Investment Fund (SIF), or a portfolio manager.
| Entity | Position under the circular |
|---|---|
| Manager of an AIF, AMC of a SIF, portfolio manager | May determine accredited status (para 3.1) |
| Other Manager in the same Group | Determination is recognised across the Group for AIFs, SIFs and portfolio management services during the validity period (para 3.2) |
| Investment Adviser or Research Analyst | May not determine status independently; may rely on a valid determination by a Manager in its Group (para 3.3) |
| Recognised Accreditation Agency | Route continues (para 3.5) |
“Group” takes the meaning of “corporate group” in Explanation I to Regulation 19F(1) of the AIF Regulations. The Manager must record the status and confirm it to the investor in writing, stating the date of accreditation and the validity period (para 3.4).
When an investor produces a valid certificate from a recognised Accreditation Agency, the Manager must rely on it and must not conduct a fresh determination during its validity (para 3.5).
How long is accreditation valid?
- Manager-led accreditation: three years from the date of accreditation (para 4.1).
- Accreditation Agency certificate: three years from the date of accreditation (para 4.3).
- Change of Manager: accreditation is determined afresh each time an investor is onboarded by a Manager outside the Group (para 4.2).
- Scheme life: an investor who is accredited at the time of onboarding into a scheme continues to be reckoned as accredited for the remaining life of that scheme (para 4.4).
- Existing certificates: a certificate issued before 5 November 2026 stays valid for its unexpired period (para 4.5, and para 10.5.5 of the Master Circular).
For an investor who deals with Managers in more than one group, the two routes therefore behave differently. A manager-led determination carries only within the Group, while a valid agency certificate must be relied on by the Manager.
How is securities market exposure measured for accreditation?
This was the open question in the October amendment. Para 5 now answers it.
| Point | What the circular says |
|---|---|
| Minimum exposure | Rs 5 crore for an individual, HUF, family trust or sole proprietorship; Rs 20 crore for a body corporate or a trust other than a family trust (para 5.1) |
| What counts | Securities in dematerialised form; mutual fund investments held through folios; unlisted securities in dematerialised form; investments in the overseas securities market; investments under the National Pension System (para 5.2) |
| Valuation of demat holdings | The value in the eCAS statement as of the statement date (para 5.3) |
| Unlisted and overseas holdings not valued in eCAS | Certificate from a practising Chartered Accountant identifying the nature of securities, valuation date and value (para 5.4) |
Exposure is an alternative test. The income and net worth tests in regulation 2(1)(ab) are unchanged: for an individual, HUF, family trust or sole proprietorship, annual income of at least Rs 2 crore; or net worth of at least Rs 7.5 crore, of which at least Rs 3.75 crore is in financial assets; or annual income of at least Rs 1 crore with net worth of at least Rs 5 crore, of which at least Rs 2.5 crore is in financial assets. A body corporate, LLP or non-family trust can instead show net worth of at least Rs 50 crore.
Which documents support each accreditation test?
Para 7.1 applies to both Managers and Accreditation Agencies.
| Test | Document |
|---|---|
| Income | Latest Income Tax Return, or a practising Chartered Accountant’s certificate that the prescribed income threshold is met |
| Net worth | Latest audited financial statements, or a net worth certificate from a practising Chartered Accountant, not older than six months |
| Securities market exposure | eCAS summary statement generated by a depository, not older than six months, or a practising Chartered Accountant’s certificate that the threshold was met within the last six months |
Annexure 11 to the Master Circular repeats this list and adds identity documents, an authorisation letter for body corporates and trusts, and a declaration from the applicant. It also states that it is optional for the Chartered Accountant to specify the actual net worth while certifying whether it meets the threshold. The Accreditation Agency or the Manager may seek other documents where the information submitted appears contradictory, suspicious or fictitious.
How are LLPs and persons resident outside India treated?
LLPs. Para 8.1 recognises an LLP as an Accredited Investor where each partner independently satisfies the criteria applicable to that partner on the date of determination. Where a partner is itself a body corporate, another LLP, a firm or a trust, that partner must satisfy the criteria applicable to it (para 8.2). This sits alongside the LLP tests in para 10.3.1(b) of the Master Circular, which also lists net worth of at least Rs 50 crore and securities market exposure of at least Rs 20 crore.
Persons resident outside India. A person resident outside India, as defined under FEMA, is deemed to be an Accredited Investor and needs neither a certificate nor manager-led accreditation (para 9.1). The Manager must record the basis on which the investor was identified as such (para 9.2). Para 9.3 states that this status does not dilute the obligations of an AIF and its Manager, as reporting entities under the Prevention of Money-laundering Act, 2002, on client due diligence, beneficial ownership and source of funds.
What must a Manager have in place before accrediting investors?
- An accreditation policy (para 6.4) covering conflict of interest controls, including separation of the accreditation function from business development and distribution; an escalation and grievance redressal process; and record retention infrastructure covering data privacy and cybersecurity.
- Records (para 6.2) of all supporting documents and verification evidence, 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 of the Manager, whichever is later. They must be available for inspection.
- Documented decisions (para 6.5) showing the criterion relied on and the supporting verification, in a form that allows independent review.
- Audit (para 6.3): periodic internal audit and compliance review of the accreditation process, as part of any existing audit undertaken by the Manager.
The Manager is responsible for compliance with the eligibility criteria and the circular (para 6.1).
What does this change for angel funds and founders?
An angel investor under regulation 19A(2) is an accredited investor, or key management personnel of the angel fund or its manager, who invests in an angel fund. Para 8.1.3 of the Master Circular requires the Manager of an Angel Fund to ensure, when accepting a contribution for an investee company, that the investor qualifies as an Accredited Investor in one of three ways: a valid accreditation certificate, a confirmation of accreditation by the manager, or the deemed criteria in regulation 2(1)(ab).
Angel Funds registered on or before 10 September 2025 must meet the accredited-investor mandate on or before 31 March 2027, and cannot accept contributions for an investee company from non-accredited investors after that date (paras 8.1.2(a) and (b); see our note on the extended deadline). For a founder raising from such a fund, an investor’s accredited status can now be confirmed by the fund’s manager, and the exposure test gives investors one more way of qualifying.
Compliance checklist
- Fund managers and portfolio managers: decide whether to offer manager-led accreditation. If yes, adopt the para 6.4 policy and set up the para 3.4 written confirmation first.
- Groups: check that each entity relying on a determination falls within “corporate group” under Explanation I to Regulation 19F(1).
- Investment Advisers and Research Analysts: stop any independent determination of status; rely only on a Manager in your Group.
- CAs: align certificate wording with paras 5.4 and 7.1, including the nature of securities, valuation date and value for unlisted and overseas holdings.
- Investors: note the expiry date on your certificate or confirmation, and keep an eCAS summary not older than six months if you rely on the exposure test.
- Legacy Angel Funds: map which investors hold a valid status ahead of 31 March 2027.
Sources
- Source: Securities and Exchange Board of India, Circular HO/19/34/11(6)2026-AFD-POD1/I/25244/2026 dated 5 November 2026, Review of the framework for Accredited Investors, sebi.gov.in.
- Source: Securities and Exchange Board of India, Master Circular for Alternative Investment Funds dated 3 June 2026, last updated on 5 November 2026, Chapters 8 and 10 and Annexure 11, sebi.gov.in.
- Source: Securities and Exchange Board of India, SEBI (Alternative Investment Funds) Regulations, 2012, regulations 2(1)(ab) and 19A(2), as amended up to 15 October 2026, sebi.gov.in.
For the background to this framework, see our note on the SEBI Board decision of 24 September 2026.
Setting up accreditation for your fund or investors?
If you manage a fund, certify investors or are raising from an angel fund, get expert guidance from Tax Update India. Book a quick call to walk through your position under the circular.
Disclaimer: This article is for general information only and reflects the SEBI instruments cited above as on 6 November 2026. It is not legal advice. Please consult a qualified professional before acting on it.
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