Borrowers Alert

Now, it seems that the moratorium period is not likely to be extended beyond August 31, 2020. Hence, RBI is offering the new one time debt resolution framework, but final call will be taken by Apex Court . RBI given the permission to lenders to restructure their loans. Under the scheme, an individual can get his loan restructured to avail a further moratorium of two years.

Who is take benefit for the debt solutions:
- Directly affected from the covid-19.
- The Loan should not be overdue for more than 30 days on 01-MAR- 2020.

Option for borrowers
- Contact the bank-branch, if face serious financial difficulties.

- Or wait the Supreme Court hearing on 28-09-2020.

SEBI Investment Adviser

 

THE INVESTMENT ADVISERS

On the date of 23th of September 2020, SEBI is issued the guideline related to the Investment advisers. In July SEBI did the massive amendment and accept almost all recommendations.

Let’s discuss the amendment (July 2020) and Guidelines (December 2019 and September 2020)

1.     New Phrases:

            ASSET UNDER ADVISER (AUA): Means the aggregate net asset value of

 

	Securities
	Investment Products
Implementation services Provide by IA	Client Directly	Other Services provider (Mutual Fund Distributor/ Stock Brokers, etc)

 

          FAMILY:

Family
Client	Investment Adviser
-         Individual Client -         Dependent Spouse -         Dependent Children -         Dependent Parents	-         Individual Investment Adviser -         Spouses -         Children -         Parents

 

         NON- INDIVIDUAL: A body corporate

Limited Company

Limited Liability Partnership

Partnership Firm

(Earlier, the partnership firm was being counted in individuals. This problem is occurring at the time of application renewal)  

 

          PERSON ASSOCIATED WITH INVESTMENT ADVICE:

 

		All Client Facing Person
Member	Partner	Officer	Director or employee	Any Sale Staff	Including any person occupying a similar status
		Except the Clerical and Office Administrative

 

2.     QUALIFICATION AND CERTIFICATION REQUIREMENT:

Regulation 7(1)	Regulation 7(2)
AN INDIVIDUAL INVESTMENT ADVISER OR A PRINCIPAL OFFICER OF A NON-INDIVIDUAL INVESTMENT ADVISER (a)    Professional qualification or Post graduate degree or Post graduate diploma (Minimum 2 Years)	AN INDIVIDUAL INVESTMENT ADVISER OR A PRINCIPAL OFFICER OF A NON-INDIVIDUAL INVESTMENT ADVISER AND PAI Certification on financial planning or fund or asset or portfolio management or Advisory services- (a)    From NISM (b)    Any other organization (including Financial Planning Standards Board of India or any recognized stock exchange in India
(b)    Five years experiences in -         Financial Product or Securities -         Fund -         Asset or portfolio Management
(c)    PERSON ASSOCIATED WITH INVESTMENT: (i) Professional qualification or Post graduate degree or Post graduate diploma (Minimum 2 Years) (ii)  Two years experiences in -         Financial Product or Securities -         Fund -         Asset or portfolio Management
Note: 1.  fresh certification must be obtained before expiry of the validity.           2.    fresh certification not though a CPE Program.
Note: Existing individual IAs - above 50 years of age need not do Post Graduation, but clear the NISM certification.

 

 

3.     NET WORTH:

Regulation 8(1)	Regulation 8(2)
Non-Individuals IA	Individual IA
INR 50,00,000/-	INR 500,000/-
Note: Comply with in 3 years

  

 

4.     REGISTRATION AS NON-INDIVIDUAL INVESTMENT ADVISOR:

a	Conversation (Non- Individual to Individual)	On or before reaching 150 Clients.
b	Requirement	IA shall file the fresh form-A with fee and other requirements.
c	Cap	-         No new client engagement once the client number reaches 150 -         During the examination of application – continue to service existing clients. -         If the application is rejected then the Individual investment advisor can work as an individual investor but the limit of 150 clients will be applicable.
d	Information of client (Latest by 15-10-2020)	In the following format, SEBI Through sebiria@sebi.gov.in

 

5.     GENERAL RESPONSIBILITY:

a	Capacity	Fiduciary
b	Consideration	-         No remuneration or compensation -         Not from any other person other than client
c	Other activities	-         Maintain an arm- length relationship -         Clear segregation -         Disclosed the conflict of interest
d	Transaction	An investment advisor shall not enter into transactions on its own account which is contrary to its advice given to clients for a period of fifteen days from the day of such advice.
		its own account after giving such revised assessment to the client at least 24 hours in advance of entering into such transaction.

 

 

6.     FEES:

AUA Mode	Fixed Fee
-         2.5% of AUA per annum per client across all services   Note: 1) Demonstrate AUA: Demat statements, unit statements etc.   2) Any portion of AUA held by the client under any pre-existing distribution arrangement with any entity shall be deducted from AUA for the purpose of charging fee by the IA	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.
Note 1) Family of Client = Single client           2) Mode of Fee is either way on an annual basis. Change after 12 Months.           3) Fee in advance – Not exceed fees for 2 Quarters           4) Client shall be refunded the fee for the unexpired period           5) IAs shall not accept cash deposits

 

7.     DOCUMENTS:

1	KYC	Compulsory
2	Risk Profiling Assessment	-         Compulsory, clear consent on risk profiling assessment. -         IA shall use the investment policy as approved by board/management team of such non-individual clients for risk profiling and suitability analysis
3	Suitability Assessment	Compulsory
4	Copies of Agreement	-         All terms and condition -         Compulsory before charging any investment advisory fee. -         Completed with all the existing clients (01-04-2021) and submit report to SEBI – 30-06-2021 -
5	Investment Advice	-         Compulsory, Each written (Email, SMS) or oral -         All interactions with client or proposed client -         Five years
6	Rationales for arriving at Investment Advice	Compulsory
7	Register	-         Date of Advice -         Nature of Advice -         Product and Securities -         Fee
8	Conversations with client or prospective client	-         All written and oral conversations
Note: 1) Five year of period           2) electronic form – Digitally signed           3) Yearly audit- (within the six months of the end of each financial years)           4) Adverse Finding – along with approved action taken shall report to SEBI (respective local office) with one month from the date of audit report but not later than October 31.
9	Compliance Office	-         Limited Company -         LLP -         Partnership firm
10	Redressal of client grievances	-          Adequate procedure -         Any dispute between the investment adviser and his client may be resolved through arbitration or through Ombudsman authorized or appointed for the purpose by any regulatory authority, as applicable.
11	Display on Website/ Mobile App/ Written and oral communication material/KYC Forms	-         Complete name of Investment Adviser as registered with SEBI, -         Type of Registration-Individual, Non-Individual, -         Registration number, validity of registration, -         Complete address with telephone numbers, -         Contact details of the Principal Officer –contact no, email id etc., -         Corresponding SEBI regional/local office address. -         The details of complaint in following format: (Font Size 12 and Updated on every 7th day of Month) Number of Complaint
12	Free Trial	IAs shall not provide free trial for any products/services to prospective clients

 

8.     CLIENT LEVEL SEGREGATION OF ADVISORY AND DISTRIBUTION ACTIVITIES:

 

Individual Investment Adviser (hereafter “IIA”) shall not provide distribution services
Family of an individual investment adviser – Shall not provide the distribution services to the client of IIA and vice versa
Non-Individual Client – Segregation at group level
A client can either be an advisory client or distribution services client (At the group Level)	“Group” means an entity which is a -         holding, -         subsidiary, -         associate, -         subsidiary of a holding company to which it is also a subsidiary or -         an investing company the venture company for non-individual investment adviser which is a company under the said Act and in any other case, an entity which has a controlling interest or is subject to the controlling interest of a non-individual investment adviser.	maintain an arm’s length relationship between its activities as investment adviser and distributor
Note: 1.     Existing clients, who wish to take advisory services, will not be eligible for availing distribution services within the group/family of IA, and VICE VERSA. 2.     A new client will be eligible to avail either advisory or distribution services within the group/family of IA. 3.     Client, Means Individual & Non-Individual. 4.     Client shall not be forced to liquidate/switch such existing holdings. 5.     Client have discretionary power.  6.     PAN of client – identification and client level segregation. 7.     Family of Client = Client 8.     The client shall provide an annual declaration or periodic updation as the case maybe in respect of such dependent family members. 9.     IA Advice – Direct plan 10.    Individual IA – annual certificate on client segregation – from auditor 11.   Non-Individual IA – annual certificate on client segregation – from Statutory auditor (shall be obtained within 6 months of the end of the financial year, part of yearly audit)

 

 

 

 

 

 

 

 

 

This document has not any legal status. In case of any error or omission, Please check the information from the website of SEBI.