With accredited investors, Sebi opens a new channel for raising finance

with accredited investors sebi opens a new channel for raising finance

Sumary of With accredited investors, Sebi opens a new channel for raising finance:

  • Ajay Tyagi, chairman of SEBI (Reuters) At its June 29 Board meeting the Securities and Exchange Board of India (Sebi) took firm though baby steps to introduce and recognise a new category of investors — the Accredited Investors — who are of high net worth/income.
  • This should open up a new and wide channel of raising finance from informed and capable investors, particularly in areas where the present regulations are too restrictive.
  • Accredited Investors are expected to be sophisticated high net worth investors who do not need hand holding and micro-level protection by the regulator.
  • They can evaluate complex, high risk/high return products/services and negotiate terms flexibly to protect their interests.
  • Having seen small investors repeatedly suffering and, perhaps, also considering the reality of Indian markets, the rules in capital markets tend to provide for elaborate controls.
  • The result is needy issuers are deprived of funds and well-informed investors deprived of avenues with a potential of higher returns.
  • Sebi had initiated the process in February by issuing a consultation paper proposing a framework for Accredited Investors.
  • A person will be identified as an Accredited Investor on the basis of net worth or income.

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