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REGD. No. D. L.-33004/99
The Gazette of India
CG-MH-E-16122024-259447
EXTRAORDINARY
PART III—Section 4
PUBLISHED BY AUTHORITY
No. 990] | NEW DELHI, MONDAY, DECEMBER 16, 2024/ AGRAHAYANA 25, 1946
8124 GI/2024 | (1)
2 | THE GAZETTE OF INDIA : EXTRAORDINARY | [PART III-SEC.4]
(1) | in clause (ac), the words "and investment products" shall be omitted.
(2) | clause (ga) shall be omitted.
(3) | in clause (l),
(a) | the words and symbol "or investment products," appearing after the words "otherwise dealing in securities" and after the words "portfolio containing securities" shall be omitted.
(b) | after the proviso, the following proviso shall be inserted, namely: -
"Provided further that trading calls shall not be considered as investment advice for purpose of these regulations."
(4) | in clause (m), after the words "group of persons and includes" and before the words "any person who holds out", the words and symbol "a part-time investment adviser or" shall be inserted;
(5) | after clause (pa) and before clause (q), the following clause shall be inserted, namely: -
"(pb) "other business activity or employment" means such business activity or employment which is not related to securities and:
a. it does not involve handling or managing of money or funds of client or person; or
b. it is not related to providing advice or recommendation to any client or person in respect of any products or assets for investment purposes;"
(6) | after clause (q) and before clause (r), the following clause shall be inserted, namely: -
"(qa) "part-time investment adviser" means an individual or a firm, who for consideration, is engaged in the business of providing investment advice and is also engaged in any other business activity or employment;"
(7) | clause (s) shall be substituted with the following, namely: -
" "principal officer" in case of non-individual investment adviser engaged:
(i) solely in providing investment advisory services, shall mean the managing director or designated director or managing partner or executive chairman of the board or equivalent management body who is responsible for the overall function of the business and operations of non-individual investment adviser;
(ii) in the activities other than investment advisory services, through separate departments/divisions, may be the person at the management level who is a business head or unit head, responsible for the overall function of the business and operations related to investment advisory services:
Provided that in case of non-individual investment adviser being a partnership firm, one of the partners shall be designated as its principal officer:
Provided further that where no partner of firm registered as an investment adviser has minimum qualification and certification requirements provided in these regulations, it shall apply for registration as an investment adviser in the form of a limited liability partnership or a body corporate within such time as may be specified by the Board.
Explanation.— The provisions of sub clause (i) shall also be applicable to the principal officer of a non-individual entity registered both as an investment adviser and a research analyst but engaged in no other business activity."
(8) | after clause (s), the following clauses shall be inserted, namely: -
"(t) "research analyst" means any person registered under Securities and Exchange Board of India (Research Analysts) Regulations, 2014;
(u) "trading calls" shall have the same meaning as assigned to it under clause (zc) of sub-regulation (1) of regulation (2) of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014."
II. | in regulation 6, in clause (e), the word "networth" shall be substituted with the word "deposit".
III. | in regulation 7,
(1) | in sub-regulation (1),
(a) | in clause (a),
i. | after the words "A professional qualification or" and before the words and symbol "post-graduate degree", the words "graduate degree or", shall be inserted.
ii. | after the words "actuarial science" and before the words "from a university", the words "or other financial services as may be specified", shall be inserted.
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(b) | clause (b) shall be omitted.
(c) | clause (c) shall be substituted with the following, namely: -
"(c) Persons associated with investment advice shall, at all times, have a minimum qualification of graduate degree in any discipline from a university or institution recognized by the Central Government or any State Government or a recognized foreign university or institution:"
(d) | in second proviso, the words and symbols "and (b)", shall be omitted.
(2) | sub-regulation (2) shall be substituted with the following, namely: -
"(2) An individual investment adviser or principal officer of a non-individual investment adviser, registered under these regulations, persons associated with investment advice, and in case of investment adviser being a partnership firm, the partners thereof who are engaged in providing investment advice, shall have at all times relevant NISM certification as specified by the Board from time to time:
Provided that a fresh relevant NISM certification as specified by the Board from time to time shall be obtained before expiry of the validity of the existing certification to ensure continuity in compliance with certification requirements."
IV. | Regulation 8 shall be substituted with the following, namely: -
"Deposit.
8. (1) An investment adviser shall maintain a deposit of such sum, as specified by the Board from time to time.
(2) The deposit shall be maintained with a scheduled bank marked as lien in favor of a body or body corporate recognized by the Board for the purpose of administration and supervision of investment advisers in accordance with regulation 14 of these regulations:
Provided that such deposit shall be available for utilization in case the investment adviser fails to pay dues emanating out of arbitration and conciliation proceedings, if any, under the Online Dispute Resolution Mechanism or such other mechanism as may be specified by the Board."
V. | in regulation 9,
(1) | after the words "Form B" and before the words "under First Schedule", the words and symbols "to an investment adviser or in Form C to a part-time investment adviser, as the case may be," shall be inserted;
(2) | the symbol "." shall be substituted with the symbol ":";
(3) | the following proviso shall be inserted, namely: -
"Provided that an individual or partnership firm registered as a research analyst may be granted certificate of registration as an investment adviser, subject to such terms and conditions as the Board may deem fit and appropriate."
VI. | in regulation 13,
(1) | in clause (d):
(a) | the symbol ";" shall be substituted with the symbol ":”;
(b) | the following proviso shall be inserted, namely: -
"Provided that part-time investment adviser registered under these regulations shall use the term 'part-time investment adviser' in all their correspondences with their clients."
(2) | clause (e) shall be substituted with the following, namely: -
"(e) individuals registered as investment advisers whose number of clients exceed three hundred at any point of time or the fee collected during the financial year exceeds three crore rupees, whichever is earlier shall –
(i) apply for grant of in-principle registration as non-individual investment adviser;
(ii) the in-principle registration shall be valid for a period of three months to assist in the transition from registration as individual investment adviser to non-individual investment adviser;
(iii) on completion of the transition period or upon grant of certificate of registration as non-individual investment adviser, whichever is earlier, the investment adviser shall surrender his registration as individual investment adviser."
(3) | after clause (e), the following clause shall be inserted, namely: -
"(f) the number of clients of a part-time investment adviser shall not exceed seventy-five in total at any point of time.”
VII. | in regulation 15,
(1) | after sub-regulation (13), the following sub-regulation shall be inserted, namely: -
"(14) An investment adviser who uses Artificial Intelligence tools, irrespective of the scale and scenario of adoption of such tools, for servicing its clients shall be solely responsible for the security, confidentiality, integrity of the client data, use of any other information or data to arrive at investment advice, investment advice based on output of Artificial Intelligence tools and compliance with any law for the time being in force."
VIII. | in regulation 18, after sub-regulation (7), the following sub-regulations shall be inserted, namely: -
"(8) An investment adviser who provides advisory services in respect of products or services which are outside the purview of the Board, shall disclose to the client that such products or services and his advisory services in respect of such products or services are outside the regulatory purview of the Board and no recourse from the Board shall be available to such clients for any grievance arising therefrom.
(9) An investment adviser shall disclose to the client the extent of use of Artificial Intelligence tools in providing investment advice."
IX. | in regulation 19,
(1) | in sub regulation (1),
(a) | in clause (g),
(i) | after the words "list of the clients" and before the words and symbol ", the date of", the words "along with PAN" shall be inserted;
(ii) | after the words and symbol "advice, the" and before the words and symbol "products/securities", the words "details of" shall be inserted;
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iii. | the words "fee, if any charged for such advice" shall be substituted with “fee/consideration, if any charged/received for such advice";
iv. | the symbol "." appearing after the words "for such advice" shall be substituted with the symbol ";".
(b) | after clause (g), the following clause shall be inserted, namely: -
"(h) Records of communication including emails, call recordings etc. with all clients including prospective clients, as may be specified."
(2) | in sub-regulation (3), after the words "Institute of Company Secretaries of India" and before the words "and submit a report", the words “or Institute of Cost Accountants of India" shall be inserted.
X. | after regulation 19, the following regulation shall be inserted, namely: -
"Website.
19A. An investment adviser shall maintain a functional website containing such details as may be specified by the Board."
XI. | Regulation 20 shall be substituted with the following, namely: -
"20. (1) A non-individual investment adviser shall appoint either:
(i) a compliance officer; or
(ii) an independent professional who is a member of Institute of Chartered Accountants of India or Institute of Company Secretaries of India or Institute of Cost Accountants of India or member of any other professional body as may be specified by the Board, provided such a professional holds a relevant certification from NISM, as may be specified by the Board;
who shall be responsible for monitoring the compliance by the investment adviser in respect of the requirements of the Act, regulations, notifications, guidelines, instructions issued by the Board.
(2) Where independent professional referred in sub-regulation (1) of this regulation is appointed for monitoring compliance, the principal officer shall submit an undertaking to the Board or the body or body corporate recognized under regulation 14 of these regulations to the effect that the principal officer shall be responsible for monitoring the compliance in respect of the requirements of the Act, regulations, notifications, guidelines, instructions issued by the Board."
XII. | in First Schedule,
(1) | in Form A,
(a) | in item 1, after clause (d) and before clause (e), the following clauses shall be inserted, namely: -
"(da) Indicate whether the application for the grant of certificate of registration is for part-time investment adviser;
(db) Whether the applicant is engaged in any other business activity or employment? If so, details of such other business activity or employment."
(b) | in item 2,
i. | in sub-item (I),
A. | in clause 7 the words and symbols "and certification of net tangible assets certified by a chartered accountant (not more than six months old at the time of filing of application). Please note that membership number of the Chartered accountant must be included in the certificate," shall be omitted.
B. | after clause 7, the following clause shall be inserted, namely: -
"8. Where the applicant is employed and has applied for registration as a part-time investment adviser, the applicant shall enclose a no objection certificate from the employer. In case of change in employment, the applicant shall provide no objection certificate from the new employer."
ii. | in sub-item (II), in clause 7, the words "certificate by a chartered accountant, not more than six months old. Please note that membership number of the chartered accountant must be included in the certificate" shall be substituted with the word "details";
iii. | in sub-item (III), in clause 5, the words and symbols "and certification of networth of the partnership firm certified by a chartered accountant (not more than six months old at the time of filing of application). Please note that membership number of the chartered accountant must be included in the certificate" shall be omitted;
iv. | in sub-item (IV), in clause 6, the words "certificate by a chartered accountant, not more than six months old. Please note that membership number of the chartered accountant must be included in the certificate" shall be substituted with the word "details".
(c) | in item 6, after clause (g) and before clause (h), the following clause shall be inserted, namely: -
"(ga) In case of registration as part-time investment adviser, a declaration that it shall maintain arms-length relationship between its business activity as investment adviser and other business activity and shall ensure that its business activities as investment adviser are clearly segregated from its other business activity or employment.”
(2) | after Form B, the following "Form C" shall be inserted, namely: -
"FORM C
Securities and Exchange Board of India (Investment Adviser) Regulations, 2013
[See regulation 9]
Certificate of registration as Part-Time Investment Adviser
I. | In exercise of the powers conferred by sub-section (1) of section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), read with the regulations made there under, the Board hereby grants a certificate of registration to _______________ as a part-time investment adviser subject to the conditions specified in the Act and in the regulations made thereunder.
II. | The Registration Number of the part-time investment adviser is IN/IA/____________________
III. | This certificate of registration shall be valid till it is suspended or cancelled by the Board
Date:
Place: MUMBAI
By Order
Sd/-
For and on behalf of
Securities and Exchange Board of India"
PRAMOD RAO, Executive Director
[ADVT.-III/4/Exty./762/2024-25]
Footnotes:
1. | The Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 were published in the Gazette of India on January 21, 2013 vide No. SEBI/LAD-NRO/GN/2012-13/31/1778.
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2. | The Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 were subsequently amended on, -
a. | 23rd May, 2014 by the Securities and Exchange Board of India (Payment of Fees) (Amendment) Regulations, 2014 vide No. LAD-NRO/GN/2014-15/03/1089;
b. | 8th December, 2016 by the Securities and Exchange Board of India (Change in Conditions of Registration of Certain Intermediaries) (Amendment) Regulations, 2016 vide No. SEBI/LAD-NRO/GN/2016-17/023;
c. | 17th April, 2020 by the Securities and Exchange Board of India (Regulatory Sandbox) (Amendment) Regulations, 2020 vide No. SEBI/LAD-NRO/GN/2020/10;
d. | 3rd July, 2020 by the Securities and Exchange Board of India (Investment Advisers) (Amendment) Regulations, 2020 vide No. SEBI/LAD-NRO/GN/2020/22;
e. | 11th January, 2021 by the Securities and Exchange Board of India (Investment Advisers) (Amendment) Regulations, 2021, vide No. SEBI/LAD-NRO/GN/2021/04;
f. | 16th March, 2021 by the Securities and Exchange Board of India (Investment Advisers) (Second Amendment) Regulations, 2021 vide No. SEBI/LAD-NRO/GN/2021/11;
g. | 3rd August, 2021 by the Securities and Exchange Board of India (Investment Advisers) (Third Amendment) Regulations, 2021 vide No SEBI/LAD-NRO/GN/2021/34;
h. | 3rd August, 2021 by the Securities and Exchange Board of India (Regulatory Sandbox) (Amendment) Regulations, 2021 vide No. SEBI/LAD-NRO/GN/2021/30;
i. | 17th January, 2023 by the Securities and Exchange Board of India (Change in Control in Intermediaries) (Amendment) Regulations, 2023 vide No. SEBI/LAD-NRO/GN/2023/115;
j. | 07th February, 2023 by the Securities and Exchange Board of India (Payment of Fees and Mode of Payment) (Amendment) Regulations, 2023 vide No. SEBI/LAD-NRO/GN/2023/121;
k. | 3rd July, 2023 by the Securities and Exchange Board of India (Alternative Dispute Resolution Mechanism) (Amendment) Regulations, 2023 vide No. SEBI/LAD-NRO/GN/2023/137;
l. | 17th August, 2023 by the Securities and Exchange Board of India (Facilitation of Grievance Redressal Mechanism) (Amendment) Regulations, 2023 vide No. SEBI/LAD-NRO/GN/2023/146;
m. | 9th October, 2023 by the Securities and Exchange Board of India (Investment Advisers) (Amendment) Regulations, 2023 vide No. SEBI/LAD-NRO/GN/2023/154;
n. | 26th April, 2024 by the Securities and Exchange Board of India (Investment Advisers) (Amendment) Regulations, 2024 vide No. SEBI/LAD-NRO/GN/2024/169;
Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064
and Published by the Controller of Publications, Delhi-110054.
Digitally signed by SARVESH
SARVESH KUMAR SRIVASTAVA KUMAR SRIVASTAVA
Date: 2024.12.16 21:51:13 +0530
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