Securities And Exchange Board Of India (Portfolio Managers) (Second Amendment) Regulations, 2006 - S.O. No.1450(E) - SEBI/LAD/DOP/0709/2006 - SEBI

SECURITIES AND EXCHANGE BOARD OF INDIA NOTIFICATION Mumbai, the 7th September, 2006 S.O. No.1450 (E). In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following Regulations to further amend the Securities and Exchange Board of India (Portfolio Managers) Regulations, 1993, namely :- 1. These Regulations may be called the Securities and Exchange Board of India (Portfolio Managers) (Second Amendment) Regulations, 2006. 2. They shall come into force on the date of their publication in the Official Gazette. 3. In the Securities and Exchange Board of India (Portfolio Managers) Regulations, 1993: (i) in regulation 2 (a) clause (a) shall be renumbered as clause (ae) and before the clause so renumbered, the following clauses shall be inserted, namely:- (a) Act means the Securities and Exchange Board of India Act, 1992 (15 of 1992); (aa) body corporate shall have the meaning assigned to it in or under clause (7) of section 2 of the Companies Act, 1956 (1 of 1956); (ab) certificate means a certificate of registration issued by the Board; (ac) change of status or constitution in relation to a portfolio manager- (i) means any change in its status or constitution of whatsoever nature; and (ii) without prejudice to generality of sub-clause (i), includes (A) amalgamation, demerger, consolidation or any other kind of corporate restructuring falling within the scope of section 391 of the Companies Act, 1956 (1 of 1956) or the corresponding provision of any other law for the time being in force; (B) change in its managing director or whole-time director; and (C) any change in control over the body corporate; (ad) change in control , in relation to a portfolio manager being a body corporate, means:- (i) if its shares are listed on any recognised stock exchange, change in control within the meaning of regulation 12 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997; (ii) in any other case, change in the controlling interest in the body corporate; Explanation : For the purpose of sub-clause (ii), the expression controlling interest means an interest, whether direct or indirect, to the extent of at least fifty one percent. of voting rights in the body corporate; (b) after clause (ae) as so renumbered, the following clause shall be inserted, namely: (af) discretionary portfolio manager means a portfolio manager who exercises or may, under a contract relating to portfolio management, exercise any degree of discretion as to the investments or management of the portfolio of securities or the funds of the client, as the case may be; (c) after clause (c) the following clauses shall be inserted, namely: (ca) portfolio means the total holdings of securities belonging to any person; (cb) portfolio manager means any person who pursuant to a contract or arrangement with a client, advises or directs or undertakes on behalf of the client (whether as a discretionary portfolio manager or otherwise) the management or administration of a portfolio of securities or the funds of the client, as the case may be; (d) clause (e) shall be omitted; (e) in clause (f), the words and the rules occurring after the words defined in the Act and the words or the rules, as the case may be occurring at the end shall be omitted; (ii) regulation 3 shall be renumbered as regulation 3A, and before the regulation so renumbered, the following regulation shall be inserted, namely: Registration as portfolio manager 3. No person shall act as portfolio manager unless he holds a certificate granted by the Board under these regulations. Provided that a merchant banker acting as a portfolio manager immediately before commencement of the Securities and Exchange Board of India (Portfolio Managers) (Second Amendment) Regulations, 2006 may continue to do so for a period of six months from such commencement or, if he has made an application for registration under these regulations within the said period of six months, till the disposal of such application. (iii) in regulation 9:- (a) in sub-regulation (1), after the words in Form A and before the full stop, the words along with fees specified in clause 1 of Schedule II shall be inserted; (b) sub-regulation (3) shall be substituted with the following, namely:- (3) The Board, on being satisfied that the applicant fulfills the requirements specified in regulation 6, shall send an intimation to the applicant and on receipt of payment of renewal fees as specified in paragraph 2 of Schedule II, grant a renewal of the certificate; (iv) after regulation 9, the following regulations shall be inserted, namely:- Conditions of registration 9A. (1) Any registration granted under regulation 8 or any renewal granted under regulation 9 shall be subject to the following conditions, namely:- (a) where the portfolio manager proposes to change its status or constitution, it shall obtain prior approval of the Board for continuing to act as such after the change; (b) it shall pay the fees for registration or renewal, as the case may be, in the manner provided in these regulations; (c) it shall take adequate steps for redressal of grievances of the investors within one month of the date of the receipt of the complaint and keep the Board informed about the number, nature and other particulars of the complaints received; (d) it shall maintain capital adequacy requirements specified in regulation 7 at all times during the period of the certificate or renewal thereof; (e) it shall abide by the regulations made under the Act in respect of the activities carried on by it as portfolio manager. (2) Nothing contained in clause (a) of sub-regulation (1) shall affect the obligation to obtain a fresh registration under section 12 of the Act in cases where it is applicable. Period of validity of certificate 9B. The certificate of registration granted under regulation 8 and its renewal granted under regulation 9, shall be valid for a period of three years from the date of its issue to the applicant. (v) in Schedule II (a) paragraph 1 shall be substituted with the following, namely:- 1. Every portfolio manager shall pay a non-refundable fee of one lakh rupees along with the application for grant or renewal of certificate of registration. (b) in paragraph 1A, for the figures, letters and words a sum of ₹ 5 lakhs , the words a sum of ten lakh rupees shall be substituted; (c) paragraph 2 shall be substituted with the following, namely: 2. Every portfolio manager shall pay a renewal fee of five lakh rupees upon grant of renewal. (d) in paragraph 3, in clause (b), for the words disposing of the application for renewal made under sub-regulation (1) of regulation 9 , the words under sub-regulation (3) of regulation 9 shall be substituted. F.No. SEBI/LAD/DOP/0709/2006 M. DAMODARAN, Chairman Footnotes: 1. The principal regulations, SEBI (Portfolio Managers) Regulations, 1993 were issued under S.O. No. SEBI/LE/93/III dated January 7, 1993 published in the Gazette of India, Part II, Section 3(ii) dated January 7, 1993. 2. The Securities and Exchange Board of India (Portfolio Managers) Regulations, 1993, were subsequently amended on: a. November 28, 1993 by , SEBI (Portfolio Managers) (Amendment) Regulations, 1993 published in the Official Gazette vide S.O. No. 939(E). b. November 28, 1995 by SEBI (Payment of Fees) (Amendment) Regulations, 1995 vide S.O No.939 (E). c. January 05, 1998 by SEBI (Portfolio Managers) (Amendment) Regulations, 1998 published in the Official Gazette vide S.O. No. 20 (E). d. September 30, 1999 by SEBI (Portfolio Managers) (Amendment) Regulations, 1999 published in the Official Gazette vide S.O. No. 793 (E). e. February 22, 2000 by SEBI (Portfolio Managers) (Amendment) Regulations, 2000 published in the Official Gazette vide S.O. No. 146 (E). f. March 28, 2000 by SEBI (Appeal to Securities Appellate Tribunal) (Amendment) Regulations, 2000 published in the Official Gazette vide S.O no. 278(E). g. May 29, 2001 by SEBI (Investment Advice by Intermediaries) (Amendment) Regulations, 2001 vide S.O no. 476 (E). h. September 27, 2002 by SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 vide S.O. No. 1045 (E). i. October 11, 2002 by SEBI (Portfolio Managers) (Amendment) Regulations, 2002 vide S.O no. 1087 (E). j. March 10, 2004 by the Securities and Exchange Board of India (Criteria for Fit and Proper Person) Regulations, 2004 vide S.O. No. 398(E). k. May 27, 2004 by SEBI (Portfolio Managers) (Amendment) Regulations, 2004 vide S.O no. 654 (E). l. July 5, 2006 by SEBI (Portfolio Managers) (Amendment) Regulations, 2006 vide S.O no. 997 (E).