The Securities and Exchange Board of India in its press release dated 3rd July 2020 has notified amendments to investment adviser norms which would be effective after three months and the amendments are intended to strengthen the regulatory framework for investment advisers.
The amendment has enhanced the eligibility criteria for registration as an investment adviser including net worth requirement of Rs 50 lakh for non-individuals and Rs 5 lakh for individuals. At present, individuals are required to have a net worth of Rs 1 lakh, while the same for body corporate or non-individuals are at least Rs 25 lakh.
Investment Advisers are allowed to provide implementation services (Execution) through direct schemes/ products in the securities market. However, no consideration can be received directly or indirectly, at investment adviser’s group or family level for these services.
Further through this amendment, the individual will have the option to register as an investment adviser or provide distribution services as a distributor, while a non-individual investment adviser will have client-level segregation at group level for these services and maintain an arm’s length relationship between its activities by providing advisory services through a separately identifiable department or division and for ensuring greater transparency with reference to advisory activities, the amendments call for mandatory agreement to be entered between IA and the client.
Click here to read the notification.
