Guidelines for Investment Advisers
Summary
This circular outlines specific compliance guidelines for SEBI Registered Investment Advisers effective from September 30, 2020. It mandates client-level segregation of advisory and distribution activities, standardizes investment advisory agreements, and defines fee structures. Additionally, it specifies qualification requirements, registration thresholds for individual advisers, and record-keeping obligations. This section mandates specific record-keeping formats and retention periods for investment advisers, including a five-year standard duration. It requires annual compliance audits with strict reporting timelines for adverse findings to SEBI offices. Additionally, it outlines risk profiling requirements for non-individual clients and prescribes mandatory disclosures on websites and in client agreements. This section outlines the operational and legal framework for investment advisory agreements, covering validity, amendments, and termination procedures. It mandates specific disclosures regarding conflicts of interest, fee structures, and liability limitations for the Investment Adviser. Additionally, it establishes protocols for handling client death or disability, dispute re
Text
SEBI notified the Securities and Exchange Board of India (Investment Advisers) (Amendment) Regulations, 2020 on July 03, 2020, which shall come into force on September 30, 2020.
Existing clients wishing to take advisory services will not be eligible for availing distribution services within the group/family of IA, and vice versa.
A new client is eligible to avail either advisory or distribution services within the group/family of IA, with the option made available at the time of onboarding.
Clients shall have discretion to continue holding assets prior to applicability under existing arrangements and shall not be forced to liquidate or switch such existing holdings.
PAN of each client shall be the control record for identification and client level segregation.
In case of an individual client, 'family of client' shall be reckoned as a single client and PAN of all members would jointly and severally be the control record.
The client shall provide an annual declaration or periodic updation in respect of dependent family members whose assets originate from income of a single earning individual.
IA shall, wherever available, advice direct plans (non-commission based) of products only.
The investment adviser shall maintain on record an annual certificate from an auditor confirming compliance with client level segregation requirements, obtained within 6 months of the end of the financial year.
IA shall enter into an investment advisory agreement with its clients mandatorily covering the terms and conditions provided in Annexure-A.
IA shall ensure that neither any investment advice is rendered nor any fee is charged until the client has signed the agreement and provided copy of signed agreement to the client.
IA shall enter into investment advisory agreement with its clients including existing clients latest by April 01, 2021 and submit a report confirming the same to SEBI latest by June 30, 2021.
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Source: SecMarx — Guidelines for Investment Advisers. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.