(1) It shall be the duty of every investment adviser in respect of whom an inspection has been ordered under the regulation 23 and any other associate person who is in possession of relevant information pertaining to conduct and affairs of such investment adviser, including representative of investment adviser, if any, to produce to the inspecting authority such books, accounts and other documents in his custody or control 14 and furnish him with such statements and information as the inspecting authority may require for the purposes of inspection.
(2) It shall be the duty of every investment adviser and any other associate person who is in possession of relevant information pertaining to conduct and affairs of the investment adviser to give to the inspecting authority all such assistance and shall extend all such co-operation as may be required in connection with the inspection and shall furnish such information as sought by the inspecting authority in connection with the inspection.
(3) The inspecting authority shall, for the purposes of inspection, have power to examine on oath and record the statement of any employees, directors, partners or person responsible for or connected with the activities of investment adviser or any other associate person having relevant information pertaining to such investment adviser.
(4) The inspecting authority shall, for the purposes of inspection, have power to obtain authenticated copies of documents, books, accounts of investment adviser, from any person having control or custody of such documents, books or accounts.
Submission of report to the Board.
26. The inspecting authority shall, as soon as possible, on completion of the inspection submit an inspection report to the Board:
Provided that if directed to do so by the Board, the inspecting authority may submit an interim report.
Action on the inspection report.
27. The Board may after consideration of the inspection report and after giving reasonable opportunity of hearing to the investment advisers or its authorized representatives, issue such directions as it deems fit in the interest of securities market or the investors including,-
(a) requiring an investment adviser not to provide investment advice for a particular period;
(b) requiring the investment adviser to refund any money collected as fees, charges or commissions or otherwise to the concerned clients along with the requisite interest.
(c) prohibiting the investment adviser from operating in the capital market or accessing the capital market for a specified period.
CHAPTER V PROCEDURE FOR ACTION IN CASE OF DEFAULT Liability for action in case of default.
28. An investment adviser who - 15
(a) contravenes any of the provisions of the Act or any regulations or circulars issued thereunder;
(b) fails to furnish any information relating to its activity as an investment adviser as required by the Board;
(c) furnishes to the Board information which is false or misleading in any material particular;
(d) does not submit periodic returns or reports as required by the Board;
(e) does not co-operate in any enquiry, inspection or investigation conducted by the Board;
(f) fails to resolve the complaints of investors or fails to give a satisfactory reply to the Board in this behalf, shall be dealt with in the manner provided under the Securities and Exchange Board of India (Intermediaries) Regulations, 2008.
CHAPTER VI MISCELLANEOUS Power of the Board to issue clarifications etc.
29. In order to remove any difficulties in the application or interpretation of these regulations, the Board may issue clarifications and guidelines in the form of circulars.
Power of the Board over body or body corporate recognized under regulation 14.
30. The Board reserves the right to alter, modify and overrule any decision, action taken or penalties imposed by the body or body corporate recognized under regulation 14.
16 FIRST SCHEDULE FORM A Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 4[See Regulation 3] 5[Application for Grant of Certificate of Registration] Securities and Exchange Board of India SEBI Bhavan, C4-A, G Block, Bandra Kurla Complex, Bandra (East), Mumbai 400051 - India INSTRUCTIONS
1. This form is meant for use by the applicant for grant of certificate of registration as an investment adviser.
2. The applicant should complete this form, and submit it, along with all supporting documents to the Board at its head office at Mumbai.
3. This application form should be filled in accordance with these regulations.
4. The application shall be considered by the Board provided it is complete in all respects.
5. All answers must be legible and all the pages must be numbered with signature/ stamp on each page of the form.
6. Information which needs to be supplied in more detail may be given on separate sheets which should be attached to the application form and appropriately numbered.
7. The application must be signed.
8. The application must be accompanied by an application fee as specified in the Second Schedule to these regulations.
1. GENERAL INFORMATION
(a) Name, address of the registered office, address for correspondence and principal place of business, telephone number(s), fax number(s), e-mail address of the applicant.
4Substituted for the words “See Regulations 3 and 11”by the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-2016.
5Substituted for the words “Application for Grant of Certificate of Registration/Renewal as investment adviser”by the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-2016.
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(b) 6[***].
(c) Name, direct line number, mobile number and e-mail of the contact person(s).
(d) Legal structure of applicant - Whether the applicant is an individual, body corporate (including company), partnership firm or limited liability partnership.
(e) Whether the applicant is a bank /NBFC.
(f) Date and place of incorporation/ establishment, if any. If the applicant is incorporated outside India, details of such incorporation.
(g) Whether the applicant is engaged in investment advisory services prior to making application under these regulations.
(h) Whether the applicant is registered with SEBI, RBI, IRDA or PFRDA in any capacity. If so, details of such registration.
(i) Write-up on the activities of the applicant.
(For renewal application, provide details of existing investment advisory services including number and type of clients, assets under advice, revenue, profitability, products/ securities on which investment advice was provided, etc.)
2. DETAILS OF APPLICANT (Provide details of only the section applicable to you) I. In case applicant is an individual:
1. Whether the applicant has:
a. A professional qualification or post-graduate degree or post graduate diploma in finance, accountancy, business management, commerce, economics, capital market, banking, insurance or actuarial science from a university or an institution recognized by the Central Government or any State Government or a recognised foreign university or institution or association; or b. A graduate in any discipline with an experience of at least five years in activities relating to advice in financial products or securities or fund or asset or portfolio management.
(Provide self certified copies of supporting documents).
2. Copy of certification obtained in accordance with regulation 7(2).
(If the applicant is an existing investment adviser applying for fresh registration, then provide a declaration stating that it shall obtain such certification within two years from the date of commencement of 6 Omitted by the by the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-2016. Prior to omission sub-para(b) read as under:
“(b) Whether application is for registration/ renewal. Provide registration number if the application is for renewal of certificate.” 18 theseregulations and submit a copy of the certification to the Board within 15 days of receipt of such certification.)
3. Number of employees and agents of the applicant, if any,who shall render investment advice under these regulations on behalf of the applicant.
Provide documents as mentioned in points (1) to (2) above for such employees/ agents.
4. Enclose identity proof and address proof of the applicant.
5. Details of ownership/directorship of the applicant in any companiesor partnership interest in any firm or limited liability partnership.
6. Copy of Income Tax Return/ Copy of Form 16 for the last 3 years.
7. Copy of assets and liabilities statement 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, II. In case applicant is a company:
1. Shareholding pattern and profile of the directors (Enclose identity proof and address proof of the directors).
2. Number of employees and agents of the applicant (hereinafter referred to as ‘representatives’)who render/ propose to render investment advice under these regulations on behalf of the applicant.
3. Declaration by the applicant that its representatives currently comply with the certification and qualification requirements under regulation 7. (If the applicant is an existing investment adviser applying for fresh registration, then provide a declaration stating that the applicant shall ensure that all its representatives obtain such certification within two years from the date of commencement of theseregulations and after all its representatives obtain the certification, a declaration to that effect shall be submitted to SEBI.)
4. Declaration by the applicant that it shall ensure that its representatives comply with the certification and qualification requirements under Regulation 7 at all times.
5. List of associated companies registered with SEBI, RBI, IRDA or PFRDA along with the registration number.
6. If applicant is a bank or NBFC, then copy of approval from RBI for undertaking investment advisory services.
7. Net worth 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, III. In case applicant is a partnership firmor a limited liability partnership:
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1. Names and Beneficial ownership pattern of the partners engaged/proposed to engage in investment advice (Enclose identity proof and address proof of the partners).
2. Whether the aforesaid partners have:
a. A professional qualification or post-graduate degree or post graduate diploma in finance, accountancy, business management, commerce, economics, capital market, banking, insurance or actuarial science from a university or an institution recognized by the Central Government or any State Government or a recognised foreign university or institution or association; or b. A graduate in any discipline with an experience of at least five years in activities relating to advice in financial products or securities or fund or asset or portfolio management.
(Provide self certified copies of supporting documents).
3. Copy of certification obtained by the aforesaid partners in accordance with regulation 7(2).
(If the applicant is an existing investment adviser applying for fresh registration, then provide a declaration stating that all the partners engaged in investment advice shall obtain such certification within two years from the date of commencement of theseregulations and after all such partners obtain the certification, a declaration to that effect shall be submitted to SEBI.)
4. Declaration that the aforesaid partners shall obtain fresh certification before expiry of the validity of the existing certification to ensure continuity in compliance with certification requirements.
5. Copy of assets and liabilities statement and certification of net tangible assets 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.
IV. In case applicant is a body corporate(other than company or limited liability partnership):
1. Shareholding pattern and profile of the directors (Enclose identity proof and address proof of the directors).
2. Whether the applicant is set up or established under the laws of the Central or State Legislature and whether the applicant is permitted to carry on of the activity of an investment adviser (Enclose relevant extract of the relevant Statute/Act).
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3. Number of employees and agents of the applicant (hereinafter referred to as ‘representatives’)who render/ propose to render investment advice under these regulations on behalf of the applicant.
4. Declaration by the applicant that its representatives currently comply with the certification and qualification requirements under regulation 7. (If the applicant is an existing investment adviser applying for fresh registration, then provide a declaration stating that the applicant shall ensure that all its representatives obtain such certification within two years from the date of commencement of theseregulations and after all its representatives obtain the certification, a declaration to that effect shall be submitted to SEBI.)
5. Declaration by the applicant that it shall ensure that its representatives comply with the certification and qualification requirements under regulation 7 at all times.
6. Net worth 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.
3. BUSINESS PLAN
1. Proposed business plan & means of achieving the same.
2. The type of products/ securities on which investment advice is proposed to be rendered.
3. Process for risk profiling of the client and for assessing suitability of advice.
4. DETAILS OF INFRASTRUCTURE
1. Details of office space, office equipment, furniture and fixtures, communication facilities, research capacity, research software for undertaking investment advisory services.
2. Declaration that the applicant has the necessary infrastructure to effectively discharge the activities of an investment adviser.
5. EXECUTION SERVICES
1. If the applicant is a body corporate, whether the applicant proposes to offer distributionor execution services to its clients.
2. If yes, provide a declaration that the services are being offered through a subsidiary/ separately identifiable department or division.
6. OTHER INFORMATION/DECLARATIONS/ REGULATORY ACTIONS
(a) Details of all settled and pending disputes in the last 5 years.
(b) Whether any previous application for grant of certificate made by any person directly or indirectly connected with the applicant has been rejected by the Board; If yes, provide details of the same.
(c) Whether any disciplinary action has been taken by the Board or any other regulatory authority against any person directly or indirectly connected with the applicant under the Act or the regulations made there under in the last 5 years. If yes, provide details 21 of the action.
(d) Whether the applicant/directors/promoters/ partners have been indicted/involved in any economic offence in the last 5 years. If yes, provide details of the same.
(e) A credit report/ score from CIBIL for the applicant.(For applicants other than financial institutions & banking companies)
(f) Declaration that the applicant, its representatives and partners, if any, are fit and proper persons based on the criteria as specified in Schedule II of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008;
(g) Declaration that the applicant shall not obtain any consideration by way of remuneration or compensation or any other form whatsoever, from any person other than the client being advised, in respect of the underlying products or securities for which advice is provided to the client.
(h) Any other information considered relevant to the nature of services to be rendered by the applicant.
7. DECLARATION STATEMENT I/We hereby agree and declare that the information supplied in the application, including the attachment sheets, is complete and true.
AND I/ we further agree that, I/we shall notify the Securities and Exchange Board of India immediately any change in the information provided in the application.
I/ We further agree that I/ we shall comply with, and be bound by the Securities and Exchange Board of India Act, 1992, and the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013, guidelines/instructions as may be announced by the Securities and Exchange Board of India from time to time.
I/ We further agree that as a condition of registration, I/ we shall abide by such operational instructions/directives as may be issued by the Securities and Exchange Board of India from time to time.
For and on behalf of____________________________________________________ (Name of the applicant) Authorized signatory/ Applicant (Signature) (Date and Place) 22 FORM B Securities and Exchange Board of India (Investment Adviser) Regulations, 2013 [See regulation 9] Certificate of registration as 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 an investment adviser subject to the conditions specified in the Act and in the regulations made thereunder.
II. The Registration Number of the investment adviser is IN/IA/_____________.
Date :
Place : MUMBAI By Order Sd/- For and on behalf of Securities and Exchange Board of India 23 7[SECOND SCHEDULE SecuritiesandExchangeBoardofIndia(Investment Advisers) Regulations, 2013 [Regulation 9] FEES
1. Every applicant shall pay non-refundable application fees along with the application for grant 8[***] of certificate of registration as under:
a. For individuals and firms � 5,000 b. For Body Corporate including Limited Liability Partnerships � 25,000
2. Every applicant shall pay registration9[***] fee at the time of grant or renewal of certificate by the Board as under:
a. for individuals and firms �10,000 b. for Body Corporate including Limited Liability Partnerships � 5,00,000 ]
3. 10[An investment adviser who has been granted a certificate of registration, to keep its registration in force, shall pay fee prescribed at paragraph 2 above every five 7 Substituted by the SEBI (Payment of Fees) (Amendment) Regulations, 2014, w.e.f 23.05.2014. Prior to its substitution, the Second Schedule read as under:
1. “Every applicant shall pay non-refundable application fees of five thousand rupees along with the application for grant or renewal of certificate of registration.
2. Applicants which are individuals and firms shall pay a sum of ten thousand rupees as registration/ renewal fee at the time of grant or renewal of certificate by the Board.
3. A body corporate shall pay a sum of one lakh rupees as registration/ renewal fee at the time of grant or renewal of certificate by the Board.
4. The fee referred to in paragraph 1, 2 and 3 shall be paid by the applicant within fifteen days from the date of receipt of intimation from the Board by a demand draft in favor of 'Securities and Exchange Board of India' payable at Mumbai or at respective regional or local office.” 8 The words “or renewal” omitted by the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-2016.
9 The words “/renewal” omitted by the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-2016.
24 years , from the date of grant of certificate of registration or from the date of grant of certificate of registration granted prior to the commencement of the Securities and Exchange Board of India (Change in Conditions of Registration of Certain Intermediaries) (Amendment) Regulations, 2016, as the case may be, within three months before expiry of the period for which fee has been paid.]
4. 11[The fee referred to in paragraph 2 shall be paid by the applicant within fifteen days from the date of receipt of intimation from the Board by way of demand draft in favour of Securities and Exchange Board of India' payable at Mumbai or at respective regional or local office. or by way of direct credit in the bank account through NEFT/RTGS/IMPS or any other mode allowed by RBI.]
THIRD SCHEDULE SecuritiesandExchangeBoardofIndia(Investment Advisers) Regulations, 2013 [See sub-regulation (9) of regulation 15] CODE OF CONDUCT FOR INVESTMENT ADVISER
1. Honesty and fairness An investment adviser shall act honestly, fairly and in the best interests of its clients and in the integrity of the market.
2. Diligence An investment adviser shall act with due skill, care and diligence in the best interests of its clients and shall ensure that its advice is offered after thorough analysis and taking into account available alternatives.
3. Capabilities 10 Inserted by the by the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-2016.
11by the Securities andExchange Board ofIndia (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations,2016 w.e.f. 08-12-2016.
25 An investment adviser shall have and employ effectively appropriate resources and procedures which are needed for the efficient performance of its business activities.
4. Information about clients An investment adviser shall seek from its clients, information about their financial situation, investment experience and investment objectives relevant to the services to be provided and maintain confidentiality of such information.
5. Information to its clients An investment adviser shall make adequate disclosures of relevant material information while dealing with its clients.
6. Fair and reasonable charges An investment adviser advising a client may charge fees, subject to any ceiling as may be specified by the Board, if any. The investment adviser shall ensure that fees charged to the clients is fair and reasonable.
7. Conflicts of interest An investment adviser shall try to avoid conflicts of interest as far as possible and when they cannot be avoided, it shall ensure that appropriate disclosures are made to the clients and that the clients are fairly treated.
8. Compliance An investment adviser including its representative(s) shall comply with all regulatory requirements applicable to the conduct of its business activities so as to promote the best interests of clients and the integrity of the market.
9. Responsibility of senior management The senior management of a body corporate which is registered as investment adviser shall bear primary responsibility for ensuring the maintenance of appropriate standards of conduct and adherence to proper procedures by the body corporate.
U. K.SINHA CHAIRMAN SECURITIES AND EXCHANGE BOARD OF INDIA