Sebi has notified the Sebi (Investment advisers) Regulations, 2013, wherein registration has been made compulsory for all advisers. Many advisers are scampering for legal advice as to how to structure their establishment to fit into the requirements without affecting existing and prospective business. Here’s the advice from Business Standard:
What is investment advice?
It includes advice relating to investing in, purchasing, selling or otherwise dealing in securities or investment products, and advice on investment portfolio containing securities or investment products.
What form of advice is covered?
It can be written, oral or through any other means of communication for the benefit of the client and shall include financial planning
Who is an investment adviser?
Any person, who for consideration, provides investment advice and includes any person who holds out himself as an investment adviser, by whatever name called.
What should Investment advisers do?
They should register with Sebi within six months. Registration compulsory for any entity acting as an investment adviser or holding itself out as an investment adviser
How long is the registration valid?
Registrations are valid for five years, renewable on payment of prescribed fee
What is the fee for registration?
Rs 15,000 for individuals and firms and Rs 1.05 lakh for corporate bodies
Who need not register?
Insurance agents, pension advisers, AMFI-registered mutual fund distributors, solicitors, chartered accountants, cost accountants, actuaries and fund managers.
What are the minimum qualifications?
Post graduate degree or diploma in finance or related fields. A graduate will require a minimum five years experience in financial products advice. In addition all registered advisers have to obtain a certification from National Institute of Securities Markets (NISM).
What are the capital requirements?
Individuals and partnership firms need a net worth of Rs 1 lakh, while corporate bodies are prescribed a a higher floor at Rs 25 lakh.
What are the key disclosures to be made at the time of registration?
Investment advisers have to give details of business plan including process of risk profiling, details of infrastructure, execution/ distribution services offered and a declaration that they will not receive any other remuneration from third parties for the products offered.
