Renewal of Certificate of Registration - SEBI - SEBI/IMD/DOF-I/SRP/Cir No. 1/93251 /2007

DEPUTY GENERAL MANAGER INVESTMENT MANAGEMENT DEPARTMENT SEBI/IMD/DOF-I/SRP/Cir No. 1/93251 /2007 May 11, 2007 To All Registered Portfolio Manager Dear Sirs, Sub: Renewal of Certificate of Registration As required under Section 12 of the SEBI Act and also under Regulation 3 of SEBI (Portfolio Managers) Regulations, 1993, a portfolio manager can function as such only under a Certificate of Registration issued by SEBI. It has also been specified under Regulation 9B of the SEBI (Portfolio Managers) Regulations, 1993 that such certificate of registration shall be valid for a period of three years from the date of its issue. Further, Regulation 9(1) of the aforesaid regulations requires a portfolio manager to make an application for renewal three months before the expiry of the validity of the certificate of registration However, it is noticed that at times application for renewal is not made in time. It is also possible that an application for renewal made by a portfolio manager is not disposed off by the expiry of the registration due to some reasons. As a result, the portfolio manager and its clients are not quite clear whether the entity can continue to act as a portfolio manager after expiry of registration. This circular intends to clarify these matters 1. If the application for renewal is not received at SEBI by the expiry date of the certificate of registration, the portfolio manager shall: a. cease to be a portfolio manager on the date of such expiry, b. immediately stop carrying on the portfolio manager activities from the date of such expiry, and such portfolio managers may either transfer their business to another SEBI registered portfolio manager or allow the client to withdraw the securities and funds in its custody at the option of the client, and in either case, without any additional cost to the client. The option shall be granted to each client separately. If the portfolio manager fails to comply with all of the above, it will be considered as a violation of Section 12 and may attract action under the relevant provision of SEBI Act, 1992. No application for renewal can be made after the date of expiry of registration of the Portfolio Manager. If the erstwhile Portfolio Manager makes an application after the expiry of registration such application will be considered as a fresh application for registration under the Regulations. 2. If the application for renewal is received at SEBI less than 3 months before the expiry of registration and SEBI has not advised otherwise by the date of expiry of registration, the portfolio manager shall stop undertaking any fresh business / clients from the date of expiry of the registration. 3. If the application is received at SEBI within the prescribed time and SEBI has not advised otherwise, the portfolio manager may continue to act as such even after expiry of the certificate of registration. If renewal is granted, it will be deemed to be in continuation of the earlier registration. 4. If renewal is refused by SEBI for whatever reason, the portfolio manager shall: a. cease to be a portfolio manager on the date of expiry of registration or the date of receipt of communication of refusal to grant renewal, b. immediately stop carrying on the portfolio manager activities from the date of such expiry, and such portfolio managers may either transfer their business to another SEBI registered portfolio manager or allow the client to withdraw the securities and funds in its custody at the option of the client, and in either case, without any additional cost to the client. The option shall be granted to each client separately. On failure to comply with the above, SEBI may initiate any action that may be deemed appropriate under the provisions of the SEBI Act, 1992. 5. It is clarified that in the above cases, the application for renewal shall mean the application complete in all respects. Incomplete application will be treated as no application. 6. If a portfolio manager wishes to surrender the registration voluntarily before the expiry of the registration, it shall intimate its existing clients about the same at least one month in advance before making request for surrender of certificate of registration to SEBI. Yours faithfully, S. R. Prasad