SEBI norms for investment by portfolio managers in the securities of their own associates/related parties

The Securities Exchange Board of India on 26 August, 2022 has issued circular to Portfolio managers to mandate the following:

1. Portfolio Manager shall invest up to a maximum of 30 percent of their client’s portfolio in the securities of their own associates/related parties. These limits shall be applicable only to direct investments by Portfolio Managers in equity and debt/hybrid securities of their own associates/related parties and not to any investments in the Mutual Funds
2. Portfolio Manager may make investments in the securities of its related parties or its associates only after obtaining the prior consent of the client.

Portfolio Managers shall maintain records and documents pertaining to:

1. Prior positive consent or dissent, as the case may be.
2. Instances of the passive breach of investment limits, if any.
3. Steps taken, if any to rectify the passive breach of investments limits.
4. Waiver obtained from the client regarding rebalancing in the event of a passive breach of investment limits