Master Circular for Investment Advisers
Summary
This section introduces the Master Circular for Investment Advisers issued by SEBI to consolidate various regulatory circulars into a single document. It explicitly rescinds all prior directions and instructions contained in the listed appendix circulars effective from this issuance. The text establishes transitional provisions ensuring that actions, applications, and liabilities arising under the rescinded circulars remain valid and enforceable under the new Master Circular. This section outlines guidelines for Investment Advisers regarding the segregation of advisory and distribution activities at the client level. It mandates specific terms in investment advisory agreements, including a prohibition on executing trades without explicit consent. Additionally, it details permissible fee structures, limits, and modes of payment for investment advisory services. This section outlines fee structures, including limits on Assets Under Advice (AUA) and conditions for advance payments and refunds. It mandates specific deposit requirements for Investment Advisers based on their client count, maintained as liens with IAASB. Additionally, it details relaxed qualification criteria for individ
Text
For effective regulation of Investment Advisers, the Securities and Exchange Board of India has been issuing various Circulars from time to time.
In order to enable Investment Advisers and other market stakeholders to have access to all applicable Circulars in the subject matter at one place, this Master Circular is issued. This master circular has been updated to incorporate the provision of the Circular(s) given in the appendix to this Master Circular.
With the issuance of this Master Circular, all directions/instructions contained in the Circulars listed out in the Appendix to this Master Circular shall stand rescinded to the extent they relate to Investment Advisers.
Anything done or any action taken or purported to have been done or taken under the rescinded circulars, prior to such rescission, shall be deemed to have been done or taken under the corresponding provisions of this Master Circular;
Any application made to the Board under the rescinded circulars, prior to such rescission, and pending before it shall be deemed to have been made under the corresponding provisions of this Master Circular;
The previous operation of the rescinded circulars or anything done or suffered thereunder, any right, privilege, obligation or liability acquired, accrued or incurred under the rescinded circulars, any penalty, incurred in respect of any violation committed against the rescinded circulars, or any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty as aforesaid, shall not be affected by such rescission and shall be enforceable as if the rescinded circulars had continued to be in force.
This Master Circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in securities and to promote the development of, and to regulate, the securities market
This Master Circular is available on SEBI website at www.sebi.gov.in in the path “Legal >Master Circulars”.
To ensure client level segregation at IA’s group/family level, as per Regulation 22(5) of the IA Regulations, following compliance and monitoring process shall be adopted: (a) Existing clients, who wish to take advisory services, will not be eligible for availing distribution services within the group/family of IA. Similarly, existing clients who wish to take distribution services will not be eligible for availing advisory services within the group/family of IA. (b) A new client will be eligible to avail either advisory or distribution services within the group/family of IA. However, the option to avail either advisory services or distribution services shall be made available to such client at the time of on boarding.
The client shall have discretion to continue holding assets prior to the applicability of this segregation under the existing advisory/distribution arrangement. However, the client shall not be forced to liquidate/switch such existing holdings.
Permanent Account Number (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 in “family of client” would jointly and severally be the control record.
The dependent family members shall be those members whose assets on which investment advisory is sought/provided, originate from income of a single entity i.e. earning individual client in the family. The client shall provide an annual declaration or periodic updation as the case maybe in respect of such dependent family members.
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Source: SecMarx — Master Circular for Investment Advisers. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.