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.