India’s Securities and Exchange Board of India (SEBI) has proposed a framework for accreditation of investors who want to invest in startups that would be listed on the Innovators Growth Platform. The IGP platform, earlier Institutional Trading Platform, was put in place in 2015 based on the amendment to the SEBI Regulations (Issue of Capital and Disclosure Requirements), 2009, to facilitate listing of new age startups. ITP was refurbished to IGP in September along with proposed changes in policy in the startup listing eligibility, among others. SEBI has now provided framework for accreditation of investors. This includes eligibility criteria and procedures to be recognised as an accredited investor and also mentioned the validity of accreditation. The accredited investor is being created as a new definition to include trusts, individuals, the family member of a startup and unlisted companies, and hence, enable them to get exemption from angel tax under Section 56(2)(viib) of the Income Tax Act, 1961, beyond the INR 25 Cr limit. SEBI’s accreditation framework for investors solely focuses on those listed on Innovators Growth Platform and therefore, narrows down the impact it could have. However, this could be promising and a bigger attraction to involve startups with the public markets.

(Inc42)