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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 ..... ly, 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. The dependent family members shall be those members whose assets on which investment adviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Regulation 7 of the amended IA Regulations specifies the minimum qualification and certification requirements for IAs. Further, in terms of second proviso of regulation 7 (1), existing individual IAs above f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 intimation from SEBI. (vii) Audit a. As per regulation 19 (3) of the amended IA Regulations, IA shall ensure that annual audit in respect of compliance of SEBI (Investment Advisers) Regulations, 2013 and circulars issued thereunder is conducted. The audit shall be completed within six months from the end of each financial year. b. The adverse findings of the audit, if any, along with action taken thereof duly approved by the individual IA/manag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia 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 Investment Adviser: In accordance with the applicable laws, client hereby appoints, entirely at his / her / its risk, the Investment Adviser to provide the required services in accordance with the terms and conditions of the agreement as mandated under Regulation19(1)(d) of the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013. 2. The agreement shall clearly provide for in the first page: (a) the consent of the client on the following understanding: * * "I / We have read and understood the terms and conditions of Investment Advisory services provided by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oviding 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 of India (Investment Advisers) Regulations, 2013. (g) Undertaking to abide by the Code of Conduct as specified in the Third Schedule of the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013. 5. Investment objective and guidelines: (a) Types of securities in which investment advice would be provided, including an undertaking from the investment adviser to recommend direct implementation of advice i.e. through direct schemes/direct codes, and other client specifications / restrictions on investments, if any. (b) Particulars regarding financial plan or model or strategy as agreed with the client (based on the risk profiling conducted for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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); a. to represent that they shall not provide any distribution services, for securities and investment products, either directly or through their group to an advisory client. b. to represent that they shall not provide investment advisory services, for securities and investment products, either directly or through their group to the distribution client; 13. Representation to client: The investment adviser to ensure that it will take all consents and permissions from the client prior to undertaking any actions in relation to the securities or investment product advised by the investment adviser. 14. No right to seek Power of Attorney: The Investment Adviser to clearly declare that it shall not seek any power of attorney or authorizations from its clients for implementati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : 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 agreement must disclose the steps to be taken by the Obligor in the event of the above eventuality in order to ensure protection of interest of the clients and redressal of clients' claims, including but not limited to (a) giving notice to all clients of the occurrence of the eventuality and confirmation of having taken charge over by the Obligor (b) settlement of account with the client (fees payable and/or fees refundable), (c) completion of transition of any outstanding business to another duly registered investment adviser, (d) redressal of any outstanding or new disputes / claims of clients. 22. Settlement of disputes and provision for arbitration: Adequate provisions to cover protection of acts done in good faith as well as for dispute resolution mechanism including arbitration that may be specified under the Securities and Exchange Board of India (Investment Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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