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TMI BlogGuidelines for Investment AdvisersX X X X Extracts X X X X X X X X Extracts X X X X ..... 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. c. Client under these guidelines shall include individual client or non-individual client. d. 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. e. PAN of each client shall be the control record for identification and client level segregation. f. In case of an individual client, family of client 2 shall be reckoned as a single client and PAN of all members in family of client would jointly and severally be the control record. However, the same is not applicable for non-individual clients. g. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emat statements, unit statements etc. of the client. c. Any portion of AUA held by the client under any pre-existing distribution arrangement with any entity shall be deducted from AUA for the purpose of charging fee by the IA. (B) Fixed fee mode The maximum fees that may be charged under this mode shall not exceed INR 1,25,000 per annum per client across all services offered by IA. General conditions under both modes a. In case family of client is reckoned as a single client, the fee as referred above shall be charged per family of client . b. IA shall charge fees from a client under any one mode i.e. (A) or (B) on an annual basis. The change of mode shall be effected only after 12 months of on boarding/last change of mode. c. If agreed by the client, IA may charge fees in advance. However, such advance shall not exceed fees for 2 quarters. d. In the event of pre-mature termination of the IA services in terms of agreement, the client shall be refunded the fees for unexpired period. However, IA may retain a maximum breakage fee of not greater than one quarter fee. (iv) Qualification and certification requirement Regu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce address (vi) Maintenance of record Regulation 19 (1) of the SEBI (Investment Advisers) Regulations, 2013 provides that IA shall maintain records with respect to his activities as an investment adviser. In this regard, it is clarified that: a. IA shall maintain records of interactions ,with all clients including prospective clients (prior to onboarding), where any conversation related to advice has taken place inter alia, in the form of: i. Physical record written signed by client, ii. Telephone recording, iii. Email from registered email id, iv. Record of SMS messages, v. Any other legally verifiable record. b. Such records shall begin with first interaction with the client and shall continue till the completion of advisory services to the client. c. IAs shall be required to maintain these records for a period of five years. However, in case where dispute has been raised, such records shall be kept till resolution of the dispute or if SEBI desires that specific records be preserved, then such records shall be kept till further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advisory and distribution activities, agreement and fees to be charged are aligned together. IA shall ensure compliance with measures stated above at clause 2(i), 2(ii) and 2(iii) latest by April 01, 2021. Compliance with measures referred above at clause 2 (vi), 2(viii) and 2(ix) shall be ensured latest by January 01, 2021. Further timelines have been specified under clause 2(iv), 2(v) and 2(vii). 4. This circular is issued in exercise of the 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. 5. The circular is available on SEBI website at www.sebi.gov.in under the categories Info for Investment Advisers and Legal framework - Circulars . Yours faithfully, Naveen Sharma General Manager Investment Management Department Ph: 022-26449709 Email: [email protected] Annexure-A Investment Adviser shall ensure that the following terms and conditions are incorporated in the Investment Advisory Agreement: 1. Appointment of the Investme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts at all times. 4. Functions of the Investment Adviser: Functions, obligations, duties and responsibilities of the Investment Adviser (including principal officer and all persons associated with the investment advice), with specific provisions covering, inter alia,: (a) Terms of compliance with the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 and its amendments, rules, circulars and notifications. (b) Compliance with the eligibility criteria as specified under the Investment Adviser Regulations at all times. (c) Risk assessment procedure of client including their risk capacity and risk aversion. (d) Providing reports to clients on potential and current investments. (e) Maintenance of records i.e. client-wise KYC, risk assessment, analysis reports of investment advice and suitability, terms and conditions document, related books of accounts and a register containing list of clients along with dated investment advice and its rationale in compliance with the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 . (f) Provisions regarding audit as per the Securities and Exchange Board ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in detail. 11. Relationship with related parties: The Investment Adviser to clearly declare that it is carrying on its activities independently, at an arms-length basis with its related parties. Disclosures of conflicts to be made. 12. Investment Adviser engaged in other activities : (i) The Investment Adviser (individual) to represent to the client that it maintains an arms-length relationship between its activities as an investment adviser and other activities and to covenant that this arm s length relationship shall be maintained throughout the tenure of advisory service; (ii) In case of Investment Adviser who are individuals: a. to represent that they shall not provide any distribution services. b. to represent that the family of an individual Investment Adviser shall not provide distribution services to the client advised by the individual Investment Adviser, for securities and investment products. c. to represent that they shall not provide investment advisory services, for securities and investment products, to a client who is receiving distribution services from other family members; (iii) The Investment Adviser (non-individual); ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue of the assets under advice, which may result by reason of fluctuation in asset value, or by reason of non-performance or under-performance of the securities/funds or any other market conditions. 19. Representations and covenants : Adequate and appropriate representations about qualifications of the adviser, principal officer, persons associated with the investment advice, receipt of all applicable approvals and consents (from regulatory / statutory bodies, third party consents, corporate approvals etc.) and covenant to maintain them throughout the validity of advisory service. 20. Death or Disability of client : Provisions in relation to continuation / termination of the advisory service in event of client's death / disability, succession, nomination, representation etc. to be incorporated. 21. Death or Disability of investment adviser : Every individual investment adviser must appoint one of its legal heirs, executor, trustee, administrator of estate of the deceased (the Obligor ) as the person-in-charge in the event of investment adviser s death / disability. The agreement must set out the full name, PAN and contact details of such Obligor. The agree ..... X X X X Extracts X X X X X X X X Extracts X X X X
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