Guidelines for Investment Advisers
Summary
This circular outlines amendments to the SEBI Investment Advisers Regulations, 2013, effective from December 16, 2024. It mandates specific deposit requirements for investment advisers based on their client count and sets compliance deadlines for existing entities. The document also clarifies eligibility criteria for dual registration as research analysts and part-time investment advisers. This section clarifies that non-individual investment advisers must appoint independent professionals holding specific NISM certifications to act as compliance officers. It defines the scope of 'investment advice' under SEBI purview and mandates disclosures for services outside this scope, including a transition deadline of April 30, 2025. The text also outlines new rules regarding AI tool usage, revised fee structures with increased limits and flexibility, and registration requirements for individual advisers transitioning to non-individual status. This section mandates specific agreement terms, record-keeping for implementation services, and rigorous annual compliance audit procedures for Investment Advisers. It further requires IAs to maintain a functional website with specified details and es
Text
SEBI has notified Securities and Exchange Board of India (Investment Advisers) (Second Amendment) Regulations, 2024 which came into force on December 16, 2024.
An investment adviser shall maintain a deposit based on the maximum number of clients in the previous financial year: up to 150 clients requires ₹ 1 lakh; 151-300 requires ₹ 2 lakh; 301-1,000 requires ₹ 5 lakhs; and 1,001+ requires ₹ 10 lakhs.
The deposit shall be maintained with a scheduled bank marked as lien in favor of Investment Adviser Administration and Supervisory body (IAASB).
The deposit amount may be revised for any change in applicable amount based on the maximum number of clients on any day in the previous financial year, latest by 30th April of the subsequent financial year.
The deposit requirements shall be reviewed by SEBI from time to time.
Existing IAs shall ensure compliance with the deposit requirement latest by June 30, 2025, while new applicants must comply immediately from the date of the circular.
A research analyst registered under SEBI (Research Analysts) Regulations, 2014 may be granted certificate of registration as IA provided it complies with rules under both regulations separately.
Such IA/RA shall provide an undertaking stating that it shall maintain arms-length relationship between its activity as IA and RA and ensure segregation of services.
A part-time IA is an individual or partnership firm engaged in other business unrelated to securities that does not involve handling client funds or providing investment advice.
Applicants engaged in activities permitted by financial sector regulators or statutory self-regulatory organisations like ICAI, ICSI, ICMAI are eligible for registration as part-time IA.
Part-time IAs shall be required to have similar qualification and certification requirements as prescribed under IA regulations for full-time IAs.
Part-time IA shall provide an undertaking to maintain arms-length relationship and ensure investment advisory services are clearly segregated from all other activities.
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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.