Large value accredited investor

An accredited investor already gets one perk. Their portfolio manager need not collect the usual Rs 50 lakh minimum before taking them on.

A large value accredited investor gets a bigger perk. Their portfolio manager may put up to 100% of assets under management into unlisted securities. This holds no matter the mandate type: discretionary, non-discretionary or advisory.

Now compare an ordinary non-discretionary or advisory client. That client's unlisted-securities share is capped at 25% of assets under management. This cap sits on top of what a discretionary portfolio may already hold.

The workbook does not say how much money makes an investor "large value" rather than just "accredited". It treats the label as a given. It states only what the manager may then do with that investor's money.

Chapter 12's rules on portfolio management run in tiers of investment freedom, tied to the type of client rather than the type of mandate alone.

A discretionary portfolio manager may invest client funds in listed securities, money market instruments, mutual fund units and other SEBI-specified securities — the standard universe. A portfolio manager offering non-discretionary or advisory services may go further for its clients generally, investing or advising up to 25% of assets under management in unlisted securities, in addition to what is permitted for discretionary management. For the large value accredited investor category specifically, that ceiling is removed almost entirely: the portfolio manager may offer discretionary, non-discretionary or advisory services for investment of up to 100% of assets under management in unlisted securities — subject to appropriate disclosure in the disclosure document and to the terms agreed between the client and the portfolio manager.

The regulatory logic, as far as the workbook's text goes, is that this category of investor is judged to need less protective ceiling than an ordinary client — the safeguard shifts from a fixed percentage cap to disclosure and negotiated terms instead.

Two clients approach the same portfolio manager, Meridian PMS, wanting exposure to an unlisted pre-IPO company.

Client one, an ordinary non-discretionary client with a Rs 1 crore portfolio, is capped at 25% in unlisted securities:

Maximum unlisted allocation = 25% × Rs 1,00,00,000 = Rs 25,00,000

Client two, classified as a large value accredited investor with a Rs 5 crore portfolio, faces no such 25% ceiling. Subject to disclosure in Meridian's disclosure document and to what the two of them agree, the portfolio manager could in principle put the entire Rs 5,00,00,000 into unlisted securities, including the same pre-IPO opportunity, if that is what the agreed mandate allows.

The Rs 50 lakh minimum investment that would otherwise apply to any new PMS client is also waived for both accredited investors and large value accredited investors under the workbook's Chapter 7 rule, subject to the same kind of disclosure — so a large value accredited investor's freedom is not one relaxed rule but a stack of several, each tied to the same classification.

Chapter 12 (Regulatory, Governance and Ethical Aspects of Portfolio Managers) sets the 25%-versus-100% contrast directly, immediately after describing what a discretionary manager may invest in. The examinable pairing is the two percentages — 25% for an ordinary non-discretionary or advisory client, 100% for a large value accredited investor — read alongside Chapter 7's waiver of the Rs 50 lakh minimum investment for accredited investors generally.

• 25% is the ordinary non-discretionary/advisory ceiling; 100% is for large value accredited investors. The two percentages are tested against each other and are easy to swap.
• The 100% allowance covers discretionary, non-discretionary and advisory mandates alike for this investor category — it is not limited to one style of mandate the way the 25% figure is.
• XXI-A does not state the rupee threshold that makes an accredited investor "large value." Do not answer with a specific crore figure as if the workbook gave one — it did not.
• The 100% allowance still requires appropriate disclosure in the disclosure document and agreed terms with the client — it is not an unconditional freedom.
• This is a different relaxation from the Rs 50 lakh minimum-investment waiver for accredited investors generally (Chapter 7); a large value accredited investor benefits from both, but they are two separate provisions.