SEBI
INVESTMENT ADVISERY REGULATIONS 2013
The Securities
and Exchange Board of India (SEBI) came out with the Investment Advisers Regulations 2013 on January 21, 2013. These
regulations came into force from April 21, 2013.
THE
REGULATION:
According to the SEBI
Investment Adviser Regulations 2013 any person acting as an Investment Adviser
needs to register themselves with SEBI.
There
are certain clarifications required on this:
1.
What is Investment Advice?
Investment Advice is defined as any Advice relating to Investing,
Purchasing, Selling, Dealing of Securities or Investment Products. This covers
advice rendered Orally or Written or through any means
of Communication and includes Financial Planning Advise.
2. What
is not “Investment Advice”?
Investment
Advice given through Mass Media Electronic or Print to general public is not
“Investment Advice”.
3. Who is an
“Investment Adviser”?
Any person
who for consideration is engaged in the business of providing “investment
advice” to clients whether Individual Clients, Group of Clients or any Person
or calls himself as Investment Adviser whatever the constitution of the Person
may be.
4. Who is not an “Investment Adviser”?
a.
Any
person who gives general advice on trends in the market and does not specify a
particular security or investment.
b.
Any
Insurance Agent who advises on Insurance Products and is registered by IRDA
c.
Any
Pension Adviser who offers advice on Pension Products only and is registered
with PFRDA.
d.
Any
Mutual Fund Distributor who is a member of a SEBI approved SRO or is registered
with an Association of AMC’s and gives advice on Mutual Funds.
e.
Any
Advocate who provides investment advice regarding legalities of investments.
f.
Any
Chartered Accountant, Cost Accountant, Company Secretary, Actuary who provides
investment advice specific to their profession.
g.
Any Stock Broker or Sub Broker registered with SEBI under
Stock Broker & Sub Broker Regulations, 1992, Portfolio Managers registered
under SEBI (Portfolio Managers) Regulations 1992 who provide investment advice
related to their profession.
h.
Any
Fund Manager of a Mutual Fund or Alternate Investment Fund or any Intermediary
registered with SEBI.
i.
Any
person providing Investment Advice to Clients exclusively outside India provided
they are not Persons of Indian Origin or Non- Resident Indians.
j.
Any
representative and partner of an Investment Adviser who is registered under
these regulations.
THE REQUIREMENTS:
A.
Educational
Requirements:
There
are two sets of Educational Requirements and the applicant needs to fulfil both
of them:
1. Basic Minimum
Qualification: Needs to have one of the Following Post
Graduate Qualification:
a. Professional
Qualification
b. Post
Graduate Degree
c. Post
Graduate Diploma
In the Following:
1. Finance
2. Accountancy
3. Business
Management
4. Commerce
5. Economics
6. Capital
Market
7. Banking
8. Insurance
9. Actuarial
Science
Recognized by the Central Govt., State Govt.
Recognized Foreign University, Foreign
Institution & Association.
OR
A Graduate
in any discipline with an experience of at least five years in activities
relating to advice in financial products or securities or fund or asset or
portfolio management.
2.
Compulsory
Qualification: The Investment Adviser,
Partners and Representatives of Investment Advisers need to clear either:
1.
NISM Certifications: Investment
Adviser Certification Examination-1 (IACE-1) and Investment Adviser
Certification Examination -2 (IACE-2)
OR
2. Any
Certification Accredited by NISM: Chartered Wealth Manager®
(CWM®) Certification® is accredited by NISM under this provision.
The
investment advisers seeking to register under these regulations need to ensure
that their partners and representatives obtain the above certifications within
2 years of Date of Commencement of this regulations
i.e. by 21st of April 2015.
B.
Capital
Adequacy Requirements:
Body Corporates:
Private or Public Limited Net Worth of at least 25 Lacs.
Individual or Partnership: Net Worth of Rs. 1 Lac.
PROCEDURE OF
REGISTRATION:
A. How to Apply:
1. The
Applicant for grant of registration as an Investment Adviser under SEBI
(Investment Advisers) Regulations, 2013 should make an application to SEBI in “Form A” as provided in the
Regulations along with all the necessary supporting documents.
2. Generally
on receipt of Application, the applicant will receive a reply from SEBI within
one month. However, the time taken for registration depends on how the
applicant fulfils all the registration requirements and provides the complete
information in all respects.
3. The
applicant is advised to go through the SEBI (Investment Advisers) Regulations,
2013 for checking the eligibility criteria and such other details which may
help expedite the registration process.
4. The
applicant must mention the following in the covering letter:
a.
Whether the applicant is providing investment advisery
services prior to these Regulations. If yes, provide details.
b.
Details of the investment advice provided prior to such application.
c.
It is applying for registration of as a new Investment Adviser providing
investment advisery services.
5. As an integral part of the registration
process, the applicant will submit the following
a. Form A
appropriately filled, numbered, duly signed and stamped.
b. Application fees of Rs.
5,000/- by way of bank draft in favour of “The Securities and Exchange Board of
India”, payable at Mumbai.
6. The applicant shall also make an online
application in terms of the guidelines as prescribed by SEBI from time to time.
B.
Grant
of Certification of Registration
Within one month
the applicant receives a reply from SEBI informing on Approval or Dis Approval
of Certification.
On
Receipt of approval the Applicant needs to pay the following fees:
1. Body
Corporate : Rs. 1,00,000 (Rs.
One Lac)
2. Individual
or Partner : Rs.
10,000 (Rs. Ten thousand )
The
applicant is Granted certification as per the Format provided as Form B.
C.
Documents
to be attached along with the From A.
1. Individual:
Self Attested Copy of
a. Post
Graduate Qualification OR
b. Graduate
Qualification & 5 Years’ Experience Proof
c. Copy
of the Certification obtained as per Section 7(2) like Chartered Wealth Manager®
or NISM IACE Certification.
d. Number
of Employees of Applicant who will render the Advice on his behalf and their
Qualification Proof as mentioned in points a, b and c.
e. ID
Proof and Address Proof of Applicant
f. Details
of any business interest of the applicant in any company or firm as partner or
director.
g. Copy
of ITR or From 16 for the Last 3 Financial Years.
h. Copy
of assets and liabilities statement and certification of net tangible assets
certified by a chartered accountant (not more than six months old at the time
of filing of application). Please note that membership number of the Chartered
accountant must be included in the certificate.
2.
Company:
a. Shareholding
Pattern
b. Profile
of Directors
c. ID
Proof and Address Proof of Directors
d. Declaration of Compliance with Educational and
Qualification Requirements by the representatives.
e. List
of Associated Companies registered with SEBI, RBI, IRDA or PFRDA with
Registration Number.
f. If
applicant is a bank or NBFC, then copy of approval from RBI for
undertaking
investment advisery services.
g. Net
worth certificate by a chartered accountant, not more than six months old. Please
note that membership number of the chartered accountant must be included in the
certificate
3.
Partnership:
a. Names
and Ownership Structure of the Firm
b. ID
Proof and Address Proof of the Partners
c. Educational
Qualification Proof
d. Copy
of the Certification obtained as per Section 7(2) like Chartered Wealth Manager®
or NISM IACE Certification for each partner.
e. Declaration
that the aforesaid partners shall obtain fresh certification before expiry of
the validity of the existing certification to ensure continuity in compliance
with certification requirements.
f. Copy
of assets and liabilities statement and certification of net tangible assets of
the partnership firm certified by a chartered accountant (not more than six
months old at the time of filing of application). Please note that membership
number of the chartered accountant must be included in the certificate.
In
addition to the above documents as per the constitution of the applicant the
following documents need to be provided by all applicants irrespective of their
constitution.
1. Business
Plan
2. Details
of Infrastructure
3. Execution
Services: i.e. if the applicant has an advise
execution service or product distribution service that is offers or intends to
offer to its clients. The applicant need to give a declaration that the
execution service is offered through and different department or division than
the advisery service.
Post
Registration Compliance: The SEBI Investment
Adviser Regulation Places some very important compliance requirements on the
Investment Adviser Registered under this Act. The basic motive of these
compliances is to regulate the quality of the advice and to protect the
interest of the clients availing services of the “Investment Adviser”.
Code of Conduct of
the Investment Adviser
As per Clause 15 (9) the Investment Adviser
must follow the following Code of Conduct:
1. Honesty
and fairness: An investment adviser shall act honestly, fairly and in the best
interests of its clients and in the integrity of the market.
2. Diligence:
An investment adviser shall act with due skill, care and diligence in the best
interests of its clients and shall ensure that its advice is offered after
thorough analysis and taking into account available alternatives.
3. Capabilities:
An investment adviser shall have and employ effectively appropriate resources
and procedures which are needed for the efficient performance of its business
activities.
4. Information
about clients: An investment adviser shall seek from its clients, information
about their financial situation, investment experience and investment
objectives relevant to the services to be provided and maintain confidentiality
of such information.
5. Information
to its clients: An investment adviser shall make adequate disclosures of
relevant material information while dealing with its clients.
6. Fair
and reasonable charges: An investment adviser advising a client may charge
fees, subject to any ceiling as may be specified by the Board, if any. The
investment adviser shall ensure that fees charged to the
clients is fair and reasonable.
7. Conflicts
of interest: An investment adviser shall try to avoid conflicts of interest as
far as possible and when they cannot be avoided, it shall ensure that
appropriate disclosures are made to the clients and that the clients are fairly
treated.
8. Compliance:
An investment adviser including its representative(s) shall comply with all
regulatory requirements applicable to the conduct of its business activities so
as to promote the best interests of clients and the integrity of the market.
9. Responsibility
of senior management: The senior management of a body corporate which is
registered as investment adviser shall bear primary responsibility for ensuring
the maintenance of appropriate standards of conduct and adherence to proper
procedures by the body corporate.
OBLIGATION AND
RESPONSIBILITIES OF INVESTMENT ADVISER
Some of the
Important Provision are:
1. Must
act in Fiduciary Capacity and disclose all Conflicts of Interest to the Client.
2. An
investment adviser shall not receive any consideration by way of remuneration
or compensation or in any other form from any person other than the client
being advised, in respect of the underlying products or securities for which
advice is provided.
3. An
investment adviser shall follow Know Your Client procedure as specified by the Board
from time to time.
4. Do
proper Risk Profiling of the Client and advice accordingly
5. Ensure
Suitability of Advice
6. Maintain
Proper Records as per the guidelines
7. Put
in place a proper Client Grievance Redressal System
8. Once
registered, the IA must comply with the reporting requirements as specified by
SEBI from time to time.
9. The
IA must regularly check the SEBI website for any updation
/ circulars/ guidelines issued from SEBI from time to time with respect to the
IA.
10. The
IA must intimate to SEBI any material change in the details already furnished
to SEBI within a reasonable period of time.
Resources for SEBI
Investment Advisers Regulations:
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S.No
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Particular
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Download
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1.
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SEBI Investment Adviser Regulation.pdf
|
Download
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2.
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How to get registered as an Investment Adviser.pdf
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Download
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3.
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Form A
|
Download
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4.
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From B
|
Download
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5.
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List of Documents Required
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Download
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6.
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Fee Details
|
Download
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7.
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Address of SEBI HO and other Offices
|
Download
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8.
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Examination Objectives NISM Investment Adviser Level 1
|
Download
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9.
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Examination Objectives NISM Investment Adviser Level 2
|
Download
|
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10
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Chartered Wealth Manager Certification Program Details
|
Download
|
To know more about
Chartered Wealth Manager® Certification Program Please click the
link below and fill the ‘Enquire Now’
Form.
www.aafmindia.co.in
Useful Links for
SEBI Investment Adviser Regulations:
SEBI
Investment Adviser Regulations 2013
FAQ
NISM Investment Adviser Certification Examination
NISM
Investment Adviser Certification Level 1
NISM
Investment Adviser Certification Level 2
Benefits
Chartered Wealth Manager Certification
http://www.sebi.gov.in/sebiweb/home/pmd_mb.jsp?PmdIndxName=A&listCode=L
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