Person giving advice to overseas clients exempted from registration: Sebi

Any person who provides investment advice to clients exclusively based out of India is exempted from seeking registration under the rules governing investment advisor (IA), capital markets regulator Sebi has said.

However, if the person gives investment advice to Non-Resident Indians (NRIs) and Person of Indian Origin (PIOs) then he or she will fall under the purview of IA rules and need to obtain a registration certificate, Sebi said in the list of frequently asked questions on investment advisers uploaded on its website on Tuesday.

Further, Sebi said that registered investment advisers can give investment advisory services to foreign portfolio investors (FPIs).

 

An investment adviser gives investment advice relating to buying selling or dealing in securities such as shares, debentures, bonds, derivatives, securitised instruments, units of AIF (alternative investment fund), REIT (real estate investment trust) and InvIT (infrastructure investment trust).

While dealing in distribution of securities, a person cannot use the nomenclature "Independent Financial Adviser or IFA or wealth adviser or any other similar name" unless registered with Sebi as an IA.

Also, the regulator said that corporate advisory services on IPOs, mergers and acquisitions, buyback, takeover, delisting, merchant banking, loan syndication, among others to an issuer and acquirer do not come under the purview of the IA regulations.

Individuals registered as IA can continue to receive trailing commission for the distribution services provided by them before receiving registration as an IA.

Under the rules, IA is required to maintain an arm's length relationship between its activities as IA and distributor by providing advisory services through a separately identifiable department or division.

"The same client cannot be offered both advisory and distribution services within the group of the non-individual entity," Sebi said.