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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 ..... sum, as specified by SEBI from time to time. The deposit requirements shall be based on the maximum number of clients of IA on any day of the previous financial year, as under: No. of clients Deposit Up to 150 clients ₹ 1 lakh 151 to 300 clients ₹ 2 lakh 301 to 1,000 clients ₹ 5 lakhs 1,001 and above clients ₹ 10 lakhs b. The deposit shall be maintained with a scheduled bank marked as lien in favor of Investment Adviser Administration and Supervisory body (IAASB), in the manner and form as may be specified by IAASB. c. The deposit amount may be revised for any change in applicable amount of deposit, based on the maximum number of clients on any day in the previous financial year, latest by 30th April of the subsequent financial year. d. The deposit requirements shall be reviewed by SEBI from time to time. e. The existing IAs shall ensure compliance with the deposit requirement latest by June 30, 2025. For the new applicants seeking registration as IA, the deposit requirement shall become effective immediately from the date of this circular. ii. Registration both as Investment Adviser and Research analyst: In terms of the proviso to Regulation 9 of the IA Reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um 10 font size) and attracting the attention of the investor while providing their other service/raising invoice related to other business/service that the activity/invoice is related to services not under purview of SEBI and no complaint can be raised to SEBI for the services rendered therein. f. The part-time IA shall disclose the nature of other activities to their clients and shall ensure that there is no conflict of interest between its IA activity and its other business activities or employment. g. For the purpose of providing additional clarity as to whether a person shall or shall not be considered eligible for registration as part-time IA, reference may be made to the following explanations/illustrations regarding other business activities or employment that a person shall or shall not engage in. Example/Illustration 1: Who shall be considered eligible for registration as part-time IA? A person shall be considered eligible for registration as part-time IA if it- (i) is a member of ICAI or ICSI or ICMAI providing their statutory services or an insurance agent having license from Insurance Regulatory and Development Authority of India ( IRDAI ). (ii) is professional such as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility partnership or a body corporate latest by September 30, 2025. v. Appointment of an independent professional as Compliance Officer : a. In terms of Regulation 20 of the IA Regulations , a non-individual investment adviser may appoint an independent professional who is a member of ICAI or ICSI or ICMAI or member of any other professional body as may be specified by the SEBI, provided such a professional holds a relevant certification from NISM, as may be specified by the SEBI. In such cases, the principal officer shall submit an undertaking to IAASB/SEBI to the effect that principal officer shall be responsible for monitoring the compliance in respect of the requirements of the Act, regulations, notifications, guidelines, instructions issued by SEBI/IAASB. b. A non-individual IA may appoint such an independent professional as compliance officer who holds certifications from NISM by passing the following certification examinations- NISM-Series-X-A: Investment Adviser (Level 1) Certification Examination, NISM-Series-X-B: Investment Adviser (Level 2) Certification Examination, NISM-Series-X-C: Investment Adviser Certification (Renewal) Examination, and NISM-Series-III A: Securiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake such additional disclosure whenever required. c. For the existing clients, investment advisers shall comply with the requirements under this clause latest by April 30, 2025. viii. Fees and flexibility in change of modes of charging fee to clients a. Regulation 15A of the IA Regulations provide that IAs shall be entitled to charge fees from a client in the manner as specified by SEBI. In terms of the fee related provisions, IAs can charge fees under two modes, namely, (i) Assets under Advice ( AUA ) mode, which is subject to a limit of 2.5 per cent of AUA per annum per family of client across all services offered by IA, and (ii) Fixed fee mode, which is subject to a specified fee limit (earlier limit ₹1,25,000) per annum per family of client across all services offered by IA. b. The maximum fee that may be charged by the IA under the fixed fee mode now stands revised and shall not exceed ₹1,51,000 per annum per family of client. The fee limit shall be revised and announced by IAASB once in three years based on the Cost Inflation Index (CII) after due consultation with SEBI. c. In terms of the earlier provisions, IA could charge fees from a client under any one mode, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase the process of transition from individual IA to non-individual IA, an individual IA shall initially be required to apply for grant of in-principle registration as non-individual IA which shall be valid for a period of up to three months within which time, the IA is required to complete the transition process. On completion of transition within the time limit, the IA shall surrender his individual IA registration certificate and will be granted final registration as nonindividual IA subject to compliance with all the requisite requirements of registration. During the transition period, individual IA shall continue to service existing clients. d. In case the aforesaid IA does not get registration as a non-individual IA, such IA shall continue the advisory activities as an Individual IA while ensuring the applicable limits on the number of clients and fee collected. x. Client level segregation of advisory and distribution activities a. Regulation 22 of the IA Regulations provides for the segregation of advisory and distribution activities by IA at family and group level. b. The IAs providing investment advisory services exclusively to institutional clients and accredited investors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, 2013 . b. Annual compliance audit report shall specify each of the provisions of the IA Regulations and the circulars and guidelines issued thereunder upon which compliance is reported. c. An IA shall - (i) complete the annual compliance audit within six months from the end of each financial year and submit a compliance audit report to IAASB/SEBI within a period of one month from the date of the audit report. (ii) submit adverse findings of audit, if any, along with action taken thereof duly approved by the individual IA or management of non-individual IA to IAASB/SEBI within a period of one month from the date of the audit report but not later than October 31st of each year for the previous financial year; and (iii) maintain on record an annual certificate from a member of ICAI/ ICSI/ICMAI or from an auditor confirming compliance with client level segregation requirements. Such annual certificate shall be obtained within six months of the end of the financial year and form part of compliance audit, in terms of Regulation 19(3) of the IA Regulations. d. IA shall publish the status of the compliance audit report on its website and shall also publish the adverse findings of audit, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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