Securities and Exchange Board of India (Portfolio Managers) (Fourth Amendment) Regulations, 2021 - SEBI/LAD-NRO/GN/2021/58 - SEBI

SECURITIES AND EXCHANGE BOARD OF INDIA NOTIFICATION Mumbai, the 9th November, 2021 SECURITIES AND EXCHANGE BOARD OF INDIA (PORTFOLIO MANAGERS) (FOURTH AMENDMENT) REGULATIONS, 2021 No. SEBI/LAD-NRO/GN/2021/58. - In exercise of the powers conferred by section 30 read with clause (c) of sub-section (2) of section 11 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, 2020 , namely, - 1. These Regulations may be called the Securities and Exchange Board of India (Portfolio Managers) (Fourth Amendment) Regulations, 2021. 2. They shall come into force on the thirtieth day from the date of their publication in the Official Gazette. 3. In the Securities and Exchange Board of India (Portfolio Managers) Regulations, 2020 ,- I. In regulation 2 , i. in sub-regulation (1), a. after clause (ab), the following clause shall be inserted, namely, - (ac) Alternative Investment Fund shall have the same meaning as assigned to it in clause (b) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012; b. after clause (f), the following clause shall be inserted, namely, - (fa) Co-investment Portfolio Manager means a Portfolio Manager who is a Manager of a Category I or Category II Alternative Investment Fund(s); and: (i) provides services only to the investors of such Category I or Category II Alternative Investment Fund(s); and (ii) makes investment only in unlisted securities of investee companies where such Category I or Category II Alternative Investment Fund(s) make investments: Provided that the Co-investment Portfolio Manager may provide services to investors from any other Category I or Category II Alternative Investment Fund(s) which are managed by them and are also sponsored by the same Sponsor(s); c. after clause (la), the following clauses shall be inserted, namely, - (lb) investee company shall have the same meaning as assigned to it in clause (o) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012; (lc) Manager shall have the same meaning as assigned to it in clause (q) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012; d. after clause (q), the following clause shall be inserted, namely, - (r) Sponsor shall have the same meaning as assigned to it in clause (w) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012; II. In sub-regulation (2) of regulation 7 , i. in sub-clause (iii) of clause (d), a. in the third proviso, the symbol . shall be substituted with the symbol : . b. after the third proviso, the following proviso shall be inserted, namely,- Provided further that the Co-investment Portfolio Manager may designate a member of the Key Investment Team of the Manager as the principal officer who fulfils either of the criteria specified in clause (g) of regulation 4 of the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, and in that case the requirement under clause (d) shall not apply to the principal officer so appointed; ii. in sub-clause (ii) of clause (e), a. in the second proviso, the symbol ; shall be substituted with the symbol : . b. after the second proviso, the following proviso shall be inserted, namely,- Provided further that the requirement under clause(e) above shall not apply to Co-investment Portfolio Manager; iii. in clause (g), a. the symbol ; shall be substituted with the symbol : . b. the following proviso shall be inserted, namely,- Provided that the requirement under clause(g) shall not apply to the Co-investment Portfolio Manager; III. In regulation 9 , i. The symbol . in the second proviso shall be substituted with the symbol : ii. after the second proviso, the following proviso shall be inserted, namely,- Provided further that the requirement under this regulation shall not apply to the Co-investment Portfolio Manager . IV. In regulation 11 , i. in clause (e), a. the symbol . shall be substituted with the symbol : . b. the following proviso shall be inserted, namely,- Provided that the requirement under clause(e) shall not apply to Co-investment Portfolio Manager. V. In regulation 22, i. in sub-regulation (2), the following provisos shall be inserted, namely,- Provided that in case of the Co-investment Portfolio Manager, the terms of co-investment in an investee company by a co-investor, shall not be more favourable than the terms of investment of the Alternative Investment Fund: Provided further that in case of the Co-investment Portfolio Manager, the terms of exit from the Co-investment in an investee company including the timing of exit shall be identical to the terms applicable to that of exit of the Alternative Investment Fund: Provided further that in case of the Co-investment Portfolio Manager, the early withdrawal of funds by the co-investors with respect to Co-investment in investee companies shall be allowed to the extent that the Alternative Investment Fund has also made an exit from respective investment in such investee companies. ii. in clause (e) of sub-regulation (4), after the first proviso, the following proviso shall be inserted, namely,- Provided further that the performance of the Co-investment Portfolio Manager shall be calculated in the manner as agreed between the Co-investment Portfolio Manager and the client: iii. in sub-regulation (6), a. the symbol . shall be substituted with the symbol : . b. the following proviso shall be inserted, namely,- Provided that the requirement under this sub-regulation shall not apply to Co-investment Portfolio Manager. VI. In regulation 23 , i. in sub-regulation (2), after the second proviso, the following proviso shall be inserted, namely,- Provided further that the requirement of minimum investment amount per client shall not apply to the Co-investment Portfolio Manager: VII. In regulation 24 , i. in sub-regulation (1), a. in clause (b), the symbol . shall be substituted with the symbol : . b. after clause (b), following proviso shall be inserted, namely,- Provided that the requirement under clause (b) shall not apply to the Co-investment Portfolio Manager. ii. in clause (a) of sub-regulation (2) a. the symbol ; shall be substituted with the symbol : . b. following proviso shall be inserted, namely,- Provided that clause(a) shall not apply in case of the Co-investment Portfolio Manager; iii. after sub-regulation (4A), the following sub-regulation shall be inserted, namely,- (4B) The Co-investment Portfolio Manager shall invest hundred percent of the assets under management in unlisted securities of investee companies where Category I and Category II Alternative Investment Funds managed by it as Manager, make investment; VIII. In regulation 26 , i. the symbol . in the proviso shall be substituted with the symbol : . ii. after the first proviso, the following proviso shall be inserted, namely,- Provided further that this regulation shall not apply to a Co-investment Portfolio Manager . IX. In the proviso to sub-regulation (1) of regulation 34 , i. the symbol . shall be substituted with the symbol : ii. after the first proviso, the following proviso shall be inserted, namely,- Provided further that in case of the Co-investment Portfolio Manager, the role of compliance officer may be assigned to the principal officer appointed in terms of clause (d) of sub-regulation (2) of regulation 7. X. FORM A of SCHEDULE 1 shall be substituted with the following, namely,- FORM A Securities and Exchange Board of India (Portfolio Managers) Regulations, 2020 Application for grant of certificate of registration Name of Applicant: (Name of Manager of Alternative Investment Fund in case applicant ------------------------------------ is offering Co-investment services only) Name of Contact Person: (Note: Compliance Officer / Principal Officer only) --------------------------------- Designation of Contact Person: -------------------------------- Mobile No: ------------------------------- Email: ------------------------------------ Instructions: 1. Applicants shall submit a completed application form together with appropriate supporting documents to the Board. 2. It is important that this application form should be filled in accordance with the regulations. 3. Application for registration shall be considered provided it is complete in all respects. 4. Answers shall be typewritten. 5. Information that is required to be provided in more detail may be given on separate sheets which should be attached to the application form. 6. All signatures shall be original. PART: I GENERAL INFORMATION 1.0 PARTICULARS OF THE APPLICANT 1.1 Name of the Applicant (Name of Manager of Alternative Investment Fund in case applicant is offering Co-investment services only): 1.2 PAN No. (Attach Copy of PAN Card) 1.3 Address of Registered office: (Attach proof of address) Pin Code:_____________ Mobile No: _______________Telephone No:____________________ Fax No:__________________ Email:_____________________ 1.4 Address for Correspondence: Pin Code:__________________ Mobile No: __________________Telephone No:_________________ Fax No: ___________________Email: _______________________ 1.5 Address - Principal place of business: (Where PMS activity shall be carried out) Pin Code:______________________ Mobile No: _______________________ Telephone No: ______________________ Fax No: __________________Email:_________________________ 1.6 If PMS activity is proposed to be carried out from any branch offices, details of such Branch Offices, including address, name of contact person, mobile number of contact person, email of contact person etc: 2.0 ORGANISATION STRUCTURE 2.1 Objectives: In brief. (Memorandum and Articles of Association/ Partnership Deed to be enclosed). (Copy of Board Resolution to be enclosed) 2.2 Date and Place of Incorporation: Day Month Year Place ROC Registration No. 2.3 Status of the Applicant: (e.g. Limited Company-Private/Public, LLP etc. If listed, names of the recognized stock exchanges to be given.) 2.4 Organization Chart: [separately showing functional responsibilities (names and designations) of portfolio management activities to be enclosed] 2.5 Particulars of all Directors/ Partners: [Name; Address; Qualification; Date of Appointment; DIN; PAN (Copy of PAN Card); Telephone No.; Mobile; Email] Experience: Entity Name Designation Area of Work Nature of Work Experience (In yrs) (Separate sheet may be attached for information on work experience) Other Directorships/Partnerships; (Name and Date of Appointment); Entity Name Date of Appointment No. of Shares Percentage of Shareholding 2.6 Particulars of Key Management Personnel [Name; Address; Qualification; Designation; Date of Appointment; PAN no. (Certified PAN Copy); Telephone No.; Mobile; Email] Experience: Entity Name Designation Area of Work Nature of Work Experience (In yrs) (Separate sheet may be attached for information on work experience) Other directorship details: Name of the Entity Date of Appointment No. of Shares Percentage of Shareholding Following documents to be provided: 1. Declaration that the personnel mentioned above is currently employed with the organization. 2. Undertaking by the personnel concerned that the details provided regarding them are true to the best of their knowledge and belief. 3. Supporting documents for work experience 2.7 Particulars of Promoters: [Type (Individual/ Corporate); Name; PAN (Copy of PAN Card); Address; Telephone No.; Mobile; Email] 2.8 Particulars of Compliance Officer [Name; PAN (Copy of PAN Card); Qualification, Date of Appointment; Address;] Experience: Company Name Designation Area of Work Nature of Work Experience (In yrs) (Separate sheet may be attached for information on work experience) 2.9 Particulars of Principal Officer [Name; PAN (Copy of PAN Card); Qualification, Date of Appointment; Address;] Certification Details: Certification Program Date of Test Result Percentage Certificate No. Validity From Validity Till Following documents to be provided: 1. Bio-Data detailing the relevant experience as per Regulation 7(2)(d) of the Securities and Exchange Board of India (Portfolio Managers ) Regulations, 2020. 2. Copy of Certifications. 3. Certificate stating that the Principal Officer has been appointed and is compliant with the requirements and is not otherwise disqualified under the Regulations. 4. In case the applicant providing Co-investment Portfolio Management services designates any one member of the Key Investment Team of the Manager, who fulfils either of the criteria, viz. experience or professional qualification, as specified in Regulation 4(g) of the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 as principal officer, an undertaking to this effect to be provided. 2.10 Other SEBI Registration Details Registered: Registration No. Role Company Name Stock Exchange Registration Start Registration End Registration Status Applied: Application No. Role Company Name Stock Exchange Application Date Application Status 2.11 Number of employees (Total number of employees and number of employees for Portfolio Management services) 2.12 Name and activities of associate companies/ entities Name of company /entity Address/ phone numbers Type of activity handled Nature / Quantum of financial dealing Nature of interest of promoter /director Nature of interest of applicant company/ entity Ownership details: Name of the Shareholder No. of Shares Percentage of Shareholding Details of Registration with SEBI or any other Govt. Regulatory Body: Name of Regulator Registration No. Registration Start Date Registration End Date Registration Status Details of Action Taken in past (if any) 2.13 List of major shareholders/ partners of the Applicant (holding 5% or more voting rights): [Name; Type; Address; Telephone No.; Mobile; Email; Share holding pattern/ partnership interest/ voting rights as on Date] 3.0 DETAILS OF INFRASTRUCTURAL FACILITIES 3.1 Principal Place of Business (1) Office Space (2) Office Equipment (3) Furniture and Fixtures (4) Communication Facilities (5) Data Processing Capacity (a) In-house (b) Others (6) Computer facility: (a) Hardware configuration (b) Software Environment (7) Details of Disaster Recovery Set up / Business Continuity Plan 3.2 Branch Office (1) Office Space (2) Office Equipment (3) Furniture and Fixtures (4) Communication Facilities (5) Data Processing Capacity a. In-house: b. Others: (6) Computer facility: a. Hardware configuration b. Software Environment (7) Details of Disaster Recovery Set up / Business Continuity Plan 4.0 BUSINESS PLAN (FOR THREE YEARS) (1) History, Major events and present activities (2) Proposed business plan and means of achieving the same. (3) Projected Profitability (Next three years) (4) (Targets, modus operandi to achieve targets, Resultant Income) 5.0 FINANCIAL INFORMATION 5.1 Capital Structure (Rs. in Crore) Year prior to the preceding year of current year Preceding year Current Year (a) Paid-up capital (b) Free reserves (excluding revaluation reserves) (c) Total (a) + (b) 5.2 Net worth of Applicant (Net worth certificate not older than 3 months from the date of application to be enclosed) (Not applicable in case of applicant offering Co-investment services only) 5.3 Deployment of Resources (Rs. in Crore) Year prior to the preceding year of current year Preceding year Current year (a) Fixed Assets (b) Plant and Machinery and office equipment (c) Investments (Details should be given separately) (d) Others Details of investments, Loans and Advances made to Associate Companies/ Firms where Promoters/Directors have an interest 5.4 Major Sources of Income: (Rs. in Crore) Year prior to the preceding year of current year Preceding year Current Year 5.5 Net Profit (Rs. in Crore) Year prior to the preceding year of current year Preceding year Current Year 5.6 Particulars of Principal Banks: Name, Contact Person; Address; Telephone No.; Mobile; Email 5.7 Particulars of Auditors: Name; Type (Internal/ External); Contact Person; Address; Telephone No.; Mobile; Email 5.8 Declaration of submission of Banker s Report from two Banks 6.0 OTHER INFORMATION 6.1 Details of all settled and pending disputes of previous 3 years: Nature of dispute Name of the party Status (Pending/ settled) Dispute Details 6.2 Indictment of involvement in any economic offences in the last three years. 6.3 Any other information considered relevant to the nature of services rendered by the company. 6.4 Details of Membership with the recognized Stock Exchanges: a. If the applicant / any of the Directors of the applicant, its subsidiary / associate / group company under the same management, are members of recognized stock exchanges? b. Broker Registration Number c. Details regarding payment of fees to SEBI d. Whether the member is facing any charges/ disciplinary action or if in past any such action was taken by the stock exchange PART II SPECIFIC INFORMATION 7.0 BUSINESS INFORMATION 7.1 Indicate type of activity carried on/ proposed to be carried on. 7.2 Indicate the facilities for making decision on portfolio investment. 7.3 Details of risk profiling procedure to be followed by the Portfolio Manager. 7.4 Details of grievance redressal and dispute resolution mechanism to be followed by the Portfolio Manager. 7.5 Provide list of approved share brokers through whom orders shall be placed, involved for Portfolio Management activities and state whether any of them were suspended/had defaulted with any Stock Exchange authority. 7.6 Describe Accounting system followed/to be followed for Portfolio Management Services. 7.7 Indicate various research and database facilities provided. 7.8 Details of activities proposed to be outsourced. 8.0 EXPERIENCE 8.1 Experience in financial services rendered: Details of Activity Area Period 9.0 ADDITIONAL INFORMATION 9.1. Copy of Draft Agreement with Client to be provided 9.2 Copy of Draft Disclosure Document to be provided 9.3. Details of Custodian: (Name, Address, SEBI Registration No., Date of Appointment) (Not applicable in case of applicant offering Co-investment services only) 9.4. Details of Registration with other Regulatory bodies. 10.0 DECLARATIONS 10.1. Declaration of compliance with Regulation 7(2) signed by at least Two Directors or designated partners (compliance with Regulation 7(2)(e) shall not be applicable in case of applicant offering Co-investment services only) 10.2. Declaration for Fit and Proper Person as specified in the Securities and Exchange Board of India (Intermediaries) Regulations, 2008 10.3. Declaration of Compliance with clause 12 (b) of Schedule III of these Regulations. 10.4. Declaration of Compliance with SEBI circular on fees and charges. 10.5. Declaration of type and frequency of reports sent/ proposed to be sent to clients. 10.6. Declaration of time taken for transfer of securities into client accounts. 10.7. Declaration of submission of periodic reports and Disclosure Document to SEBI. 10.8. Declaration of compliance with clause (e) of sub-regulation (1) of Regulation 27 - regarding maintenance of records for Investment rationale. 10.9. Declaration of availability of Disclosure document on website of Portfolio Manager. Provided that this sub-clause shall not apply in case of applicant offering only Co-investment services. 10.10. In case of applicant offering Co-investment services only, declaration stating that the applicant is a Manager of a Category I or Category II Alternative Investment Fund(s). DECLARATION This declaration must be signed by two directors/designated partners _____________________________________________________________________________ I/We hereby, apply for Registration as Portfolio Manager. I/We do hereby declare that I/We have truthfully and fully answered the questions above and provided all the information which might reasonably be considered relevant for the purposes of my/our registration. For and on behalf of __________________________________________________________________________ (Name of Applicant) ______________ _________________ Director/Designated Partner Director/Designated Partner __________________ ______________ Name in Block Letters Name in Block Letters Place: Place: Date: Date: XI. in sub-clause (iii) of clause 7 of Schedule IV, the following proviso shall be inserted, namely,- Provided that sub-clauses (i) and (ii) shall not apply in case of Co-investment Portfolio Manager. XII. in sub-clause (9) of clause III of the MODEL DISCLOSURE DOCUMENT FOR PORTFOLIO MANAGEMENT in SCHEDULE V , the following proviso shall be inserted, namely,- Provided that this sub-clause shall not apply in case of the Co-investment Portfolio Manager. AJAY TYAGI ,Chairman [ADVT.-III/4/Exty./412/2021-22] Footnote: 1. The Securities and Exchange Board of India (Portfolio Managers) Regulations, 2020 , were published in the Gazette of India on January 16, 2020 vide No. SEBI/LAD-NRO/GN/2020/03. 2. The Securities and Exchange Board of India (Portfolio Managers) Regulations, 2020 were subsequently amended on, a. 17th April, 2020 by the Securities and Exchange Board of India (Regulatory Sandbox) (Amendment) Regulations, 2020 vide No. SEBI/LAD-NRO/GN/2020/10. b. 16th March, 2021 by the Securities and Exchange Board of India (Portfolio Managers) (Amendment) Regulations, 2021 vide No. SEBI/LAD-NRO/GN/2021/10. c. 26th April, 2021 by the Securities and Exchange Board of India (Portfolio Managers) (Second Amendment) Regulations, 2021 vide No. SEBI/LAD-NRO/GN/2021/16. d. 3rd August, 2021 by the Securities and Exchange Board of India (Portfolio Managers) (Third Amendment) Regulations, 2021 vide No. SEBI/LAD-NRO/GN/2021/31.