An Overview of Portfolio Manager Registration with SEBI
In India, a Portfolio Manager is a body corporate that advises or directs on behalf of the client (whether as a discretionary portfolio manager or otherwise), the administration/management of a portfolio of securities or the funds of the client. In simple terms, a professional individual who makes investment decisions & carries out investment activities on behalf of an institution or person is known as Portfolio Manager. In India, Portfolio Managers are also known as investment counselors, asset managers, or investment managers. According to the Securities Exchange Board of India (Portfolio Managers) Regulations, 2020, before starting to work as a portfolio manager, the person has to apply for Portfolio Manager Registration with SEBI and obtain a Registration Certificate from SEBI. Whizseed has a team of SEBI experts who can help you with Portfolio Manager Registration under SEBI.
How to Become a Portfolio Manager in India?
To become a registered Portfolio Manager with SEBI in India you have to follow the following conditions:
- Educational Qualifications: You must have a bachelor's degree or master’s degree in Economics, Business Administration or Finance.
- Certifications: To become a Portfolio Manager you need CFA (Chartered Financial Analyst), CFP (Certified Financial Planner) Certification.
- Required Skills: You must have a strong analytical & decision-making skills, must have knowledge about financial market, risk assessment & asset allocation.
- Experience: You worked as a financial analyst, fund manager, or investment banker before becoming a Portfolio Manager. You have done internships & have experience in equity research & wealth management firms.
- Career Prospects: Portfolio Managers work in hedge funds, investment banks, mutual funds, and wealth management firms.
- Building a strong network & always updated with financial trends is very important for success in this field.
Types of Portfolio Manager
There are 2 different types of Portfolio Manager:
1. Discretionary Portfolio Manager: An individual or a person independently manages the client’s funds as per the client's requirements.
2. Non-Discretionary Portfolio Manager: In this type, funds are manages as per the client’s directions.
Different Roles of a Portfolio Manager in India
The most important role of a Portfolio Manager is to manage the investment portfolio of a client independently (discretionary Portfolio Manager Service) or to help the client (non-discretionary & advisory PMS) in investment activities. The SEBI has regulated the most critical roles & responsibilities of a portfolio manager. Here are some of them:
- Provide an idea of client portfolios that clients can access at any time;
- They provide quick support or customer service if the client has queries;
- They take care that the portfolio management is happening in line with the contract or agreement with the client;
- They also recommend or make changes in the investment portfolio as & when required;
- Portfolio Manager gives regular portfolio updates to clients to keep them informed about investment activities in their portfolios;
- They also provide market updates to clients to keep them informed regarding important events that may impact their money.
Eligibility Criteria for Portfolio Manager Registration with SEBI
To apply for Portfolio Manager Registration under SEBI, one needs to get themselves registered from the authority. The applicant must send an application for the Registration to the SEBI along with the documents. Then the SEBI will examines the application on the following criteria to decide whether the application is eligible for the Portfolio Manager Registration or not.
1. The applicant must be a corporate body;
2. The applicant must have a sufficient infrastructure necessary to support the activities of the portfolio manager. The infrastructure includes important equipment, office space & essential human resources;
3. The objective of the applicant should indicate his/her work to be in general interest of the investors;
4. A minimum net worth of Rs. 5 crores;
5. The applicant’s organization must have a minimum of 2 employees with at least 5 years of experience in activities like fund or investment management and stockbroking;
6. The Principal Officer (PO) of the applicant entity must have any of the following qualifications:
- Experience of a minimum of 10 years in activities regarding securities market, portfolio manager, stockbroker, or fund manager;
- CFA charter;
- Professional qualification from a recognized institution/university in the area of law, accountancy, business management & finance.
7. The application will be rejected in the following cases:
- If an earlier application from the same applicant was rejected by the board;
- If he PO or an administrative officer of the applicant organization is involved in any litigation;
- If the board has conducted any disciplinary action against any individual who has directly or indirectly connected with the applicant;
- Convicted/found guilty of any financial offence or anything involving moral turpitude.
8. He or she must have relevant NISM Certification;
9. The applicant must be a fit & proper person.
10. The capital adequacy must not be less than a net worth of Rs. 50 lakhs.
Documents Required for Portfolio Manager Registration
The following is the list of documents required for Depository Participant SEBI Registration:
- Copy of documents mentioning the applicant’s details;
- Certificate of Incorporation;
- PO’s qualifications or administrators’ details;
- Copies of filled application forms;
- MoA & AoA of the company;
- Any other relevant documents asked for filing by the board;
- Registered address proof;
- Address of the principal place of business in case it is any other place other than the registered office;
- KYC of Directors & partners along with their experience & qualifications;
- Compliance officer details along with PAN Card;
- Details of associate companies along with ownership details;
- At least 3 years of Business Plan.
Procedure for Registration of Portfolio Managers with SEBI
Step 1: Filling Out the Application Form: For getting registered as a portfolio manager, the eligible individual must apply to SEBI under Form A of Schedule I. The application form must be accompanied by a non-refundable application fee mentioned under Schedule II. The applications made prior to the coming into force of these regulations if it is made in a similar manner to that prescribed under Form-A of Schedule I.
Step 2: Submission of the Application Form: After the 1st step, the applicant needs to submit the application form to SEBI. The application should be correct & complete and should follow the instructions mentioned under the regulations.
Step 3: Examination of the application: Once your application is received, the SEBI will verify that and SEBI may call for the applicant to provide any information or clarification regarding the activities of the portfolio manager. Also, SEBI may call upon the applicant/its principal officer to appear before SEBI for personal representation. If the application is incomplete or is not in conformity with the instructions laid down, then it will be rejected. However, before rejecting the application, SEBI shall give an opportunity to the applicant to remove the objections raised by SEBI within a timeframe which shall not be more than 3 weeks.
Step 4: Approval for the Grant of Registration Certificate: While receiving the application, SEBI will take into account all matters it considered important to carry out the activities related to the portfolio management. For issuing the Registration Certificate, SEBI should be satisfied with the application. After reviewing the application, the SEBI shall intimate to the applicant the application approval & demand payment of the registration fee specified in Schedule II.
Step 5: Issuance of Certificate: Once the applicant makes the requisite fees, the SEBI shall issue the Registration Certificate.
Post-Registration Compliance by Portfolio Manager
After getting the Registration Certificate, the portfolio managers are required to comply with the following conditions:
- They must follow the provisions of the Act & the regulations;
- Portfolio Managers will have to obtain prior approval from SEBI in case of change in control in the manner as mentioned by SEBI;
- They have to intimate SEBI writing if any detail or particulars previously submitted to SEBI are false/misleading in any material or in case of any material change in information already submitted;
- Also, they will have to deposit the registration fee in the manner provided in these regulations;
- Portfolio Managers will have to take adequate steps for the redressal of the grievance of the investors within 1 month from the date of receipt of such complaint & intimate SEBI about the number, nature & other details of the complaints received;
- They will have to maintain the net worth as specified in Regulation 9 at all times during the validity of the Registration Certificate.
Conditions for Penalty Imposition on a Portfolio Manager
- If a Portfolio Manager contravenes the rules & regulations of the Act;
- A Portfolio Manager fails to provide a good solution to investor’s complaints or fails to give a satisfactory response to the SEBI regarding the same;
- If they doesn’t pay fees;
- If the manager is at fault for improper, misconduct, or unprofessional conduct;
- The portfolio manager fails to provide the information regarding the related activity of the portfolio manager (as needed by the SEBI), provides incorrect information, fails to submit periodic returns reports or fails to co-operate in any inquiry raised by the SEBI.
- If they are involved in the manipulation or price rigging or concerning activities;
- If they fail to carry out their obligation as prescribed;
- A portfolio manager contravenes the registration conditions;
- If they fail to meet the maintenance capital adequacy.
Our Role in Getting Portfolio Manager Registration Certificate
- Our expert will provide you complete support in the overall registration process;
- We will help you with documentation to avoid inaccuracy & penalty;
- We will help you in fulfilling the registration conditions to avoid penalties;
- Our experts will also help you in renewing the certificate;
- In case of authorities’ inspection, our team guarantees to provide the most acceptable directions or to accompany you during an inspection (if required);
