INVESTMENT ADVISERY REGULATIONS 2013
and Exchange Board of India (SEBI) came out with the Investment Advisers Regulations 2013 on January 21, 2013. These
regulations came into force from April 21, 2013.
According to the SEBI
Investment Adviser Regulations 2013 any person acting as an Investment Adviser
needs to register themselves with SEBI.
are certain clarifications required on this:
What is Investment Advice?
Investment Advice is defined as any Advice relating to Investing,
Purchasing, Selling, Dealing of Securities or Investment Products. This covers
advice rendered Orally or Written or through any means
of Communication and includes Financial Planning Advise.
is not “Investment Advice”?
Advice given through Mass Media Electronic or Print to general public is not
3. Who is an
who for consideration is engaged in the business of providing “investment
advice” to clients whether Individual Clients, Group of Clients or any Person
or calls himself as Investment Adviser whatever the constitution of the Person
4. Who is not an “Investment Adviser”?
person who gives general advice on trends in the market and does not specify a
particular security or investment.
Insurance Agent who advises on Insurance Products and is registered by IRDA
Pension Adviser who offers advice on Pension Products only and is registered
Mutual Fund Distributor who is a member of a SEBI approved SRO or is registered
with an Association of AMC’s and gives advice on Mutual Funds.
Advocate who provides investment advice regarding legalities of investments.
Chartered Accountant, Cost Accountant, Company Secretary, Actuary who provides
investment advice specific to their profession.
Any Stock Broker or Sub Broker registered with SEBI under
Stock Broker & Sub Broker Regulations, 1992, Portfolio Managers registered
under SEBI (Portfolio Managers) Regulations 1992 who provide investment advice
related to their profession.
Fund Manager of a Mutual Fund or Alternate Investment Fund or any Intermediary
registered with SEBI.
person providing Investment Advice to Clients exclusively outside India provided
they are not Persons of Indian Origin or Non- Resident Indians.
representative and partner of an Investment Adviser who is registered under
are two sets of Educational Requirements and the applicant needs to fulfil both
1. Basic Minimum
Qualification: Needs to have one of the Following Post
In the Following:
Recognized by the Central Govt., State Govt.
Recognized Foreign University, Foreign
Institution & Association.
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
Qualification: The Investment Adviser,
Partners and Representatives of Investment Advisers need to clear either:
NISM Certifications: Investment
Adviser Certification Examination-1 (IACE-1) and Investment Adviser
Certification Examination -2 (IACE-2)
Certification Accredited by NISM: Chartered Wealth Manager®
(CWM®) Certification® is accredited by NISM under this provision.
investment advisers seeking to register under these regulations need to ensure
that their partners and representatives obtain the above certifications within
2 years of Date of Commencement of this regulations
i.e. by 21st of April 2015.
Private or Public Limited Net Worth of at least 25 Lacs.
Individual or Partnership: Net Worth of Rs. 1 Lac.
A. How to Apply:
Applicant for grant of registration as an Investment Adviser under SEBI
(Investment Advisers) Regulations, 2013 should make an application to SEBI in “Form A” as provided in the
Regulations along with all the necessary supporting documents.
on receipt of Application, the applicant will receive a reply from SEBI within
one month. However, the time taken for registration depends on how the
applicant fulfils all the registration requirements and provides the complete
information in all respects.
applicant is advised to go through the SEBI (Investment Advisers) Regulations,
2013 for checking the eligibility criteria and such other details which may
help expedite the registration process.
applicant must mention the following in the covering letter:
Whether the applicant is providing investment advisery
services prior to these Regulations. If yes, provide details.
Details of the investment advice provided prior to such application.
It is applying for registration of as a new Investment Adviser providing
investment advisery services.
5. As an integral part of the registration
process, the applicant will submit the following
a. Form A
appropriately filled, numbered, duly signed and stamped.
b. Application fees of Rs.
5,000/- by way of bank draft in favour of “The Securities and Exchange Board of
India”, payable at Mumbai.
6. The applicant shall also make an online
application in terms of the guidelines as prescribed by SEBI from time to time.
of Certification of Registration
Within one month
the applicant receives a reply from SEBI informing on Approval or Dis Approval
Receipt of approval the Applicant needs to pay the following fees:
Corporate : Rs. 1,00,000 (Rs.
or Partner : Rs.
10,000 (Rs. Ten thousand )
applicant is Granted certification as per the Format provided as Form B.
to be attached along with the From A.
Self Attested Copy of
Graduate Qualification OR
Qualification & 5 Years’ Experience Proof
of the Certification obtained as per Section 7(2) like Chartered Wealth Manager®
or NISM IACE Certification.
of Employees of Applicant who will render the Advice on his behalf and their
Qualification Proof as mentioned in points a, b and c.
Proof and Address Proof of Applicant
of any business interest of the applicant in any company or firm as partner or
of ITR or From 16 for the Last 3 Financial Years.
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.
Proof and Address Proof of Directors
d. Declaration of Compliance with Educational and
Qualification Requirements by the representatives.
of Associated Companies registered with SEBI, RBI, IRDA or PFRDA with
applicant is a bank or NBFC, then copy of approval from RBI for
investment advisery services.
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
and Ownership Structure of the Firm
Proof and Address Proof of the Partners
of the Certification obtained as per Section 7(2) like Chartered Wealth Manager®
or NISM IACE Certification for each partner.
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.
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.
addition to the above documents as per the constitution of the applicant the
following documents need to be provided by all applicants irrespective of their
Services: i.e. if the applicant has an advise
execution service or product distribution service that is offers or intends to
offer to its clients. The applicant need to give a declaration that the
execution service is offered through and different department or division than
the advisery service.
Registration Compliance: The SEBI Investment
Adviser Regulation Places some very important compliance requirements on the
Investment Adviser Registered under this Act. The basic motive of these
compliances is to regulate the quality of the advice and to protect the
interest of the clients availing services of the “Investment Adviser”.
Code of Conduct of
the Investment Adviser
As per Clause 15 (9) the Investment Adviser
must follow the following Code of Conduct:
and fairness: An investment adviser shall act honestly, fairly and in the best
interests of its clients and in the integrity of the market.
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.
An investment adviser shall have and employ effectively appropriate resources
and procedures which are needed for the efficient performance of its business
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.
to its clients: An investment adviser shall make adequate disclosures of
relevant material information while dealing with its clients.
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.
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
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.
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.
RESPONSIBILITIES OF INVESTMENT ADVISER
Some of the
Important Provision are:
act in Fiduciary Capacity and disclose all Conflicts of Interest to the Client.
investment adviser shall not receive any consideration by way of remuneration
or compensation or in any other form from any person other than the client
being advised, in respect of the underlying products or securities for which
advice is provided.
investment adviser shall follow Know Your Client procedure as specified by the Board
from time to time.
proper Risk Profiling of the Client and advice accordingly
Suitability of Advice
Proper Records as per the guidelines
in place a proper Client Grievance Redressal System
registered, the IA must comply with the reporting requirements as specified by
SEBI from time to time.
IA must regularly check the SEBI website for any updation
/ circulars/ guidelines issued from SEBI from time to time with respect to the
IA must intimate to SEBI any material change in the details already furnished
to SEBI within a reasonable period of time.
Resources for SEBI
Investment Advisers Regulations:
SEBI Investment Adviser Regulation.pdf
How to get registered as an Investment Adviser.pdf
List of Documents Required
Address of SEBI HO and other Offices
Examination Objectives NISM Investment Adviser Level 1
Examination Objectives NISM Investment Adviser Level 2
Chartered Wealth Manager Certification Program Details
To know more about
Chartered Wealth Manager® Certification Program Please click the
link below and fill the ‘Enquire Now’
Useful Links for
SEBI Investment Adviser Regulations:
Investment Adviser Regulations 2013
NISM Investment Adviser Certification Examination
Investment Adviser Certification Level 1
Investment Adviser Certification Level 2
Chartered Wealth Manager Certification