Portfolio Manager Registration

SEBI stands for Securities and Exchange Board of India which is the market regulator in India i.e. Financial Market. In fact in India Financial Market includes even the product and entity related to the Reserve Bank of India (RBI) and Insurance Regulatory and Development Authority of India (IRDAI). Precisely securities markets are primarily governed, regulated and managed by SEBI. Other Portfolio Manager is also a registered person or entity to act in a Market regulated by SEBI.

Important Terminology

• Body corporate definition under this regulation is derived from Section 2 (11) of the Companies Act, 2013 which includes companies incorporated outside India but does not include co-operative society. 
• Discretionary portfolio manager means a portfolio manager who under contract relating to portfolio management, exercise or may exercise, any degree of discretion as to the investment of funds or management of the portfolio of securities of the client.

The eligible fund manager is read in the consolation of eligible investment fund as defined under section 9A (4) of the Income Tax Act, 1961. It read as below:-

• A person is not an employee of the eligible investment fund or a connected person of the fund
• A person is registered as a fund manager or an investment adviser with Board
• A person is acting in the ordinary course of his business as a fund manager
• A person along with his connected person shall not be entitled, directly or indirectly, to more than 20% of the profits accruing or arising to the eligible investment fund from the transactions carried out by the fund through the fund manager   

An eligible investment fund is defined as per the definition provided under section 9A (3) of the Income Tax Act, 1961. It can be further elaborated as below:-

• The fund is not a person resident in India and a resident of a country with which India has Double Taxation Avoidance Agreement
• Aggregate participation or investment in the fund, directly or indirectly, by a person resident in India does not exceed 5% of the corpus of the fund
• Funds have a minimum of 25 members who are directly or indirectly, not connected persons
• any member of the fund along with connected persons shall not have any participation interest, directly or indirectly, in the fund exceeding ten per cent;
• the aggregate participation interest, directly or indirectly, of ten or fewer members along with their connected persons in the fund, shall be less than fifty per cent;
• the fund shall not invest more than twenty per cent of its corpus in any entity
• the fund shall not make any investment in its associate entity
• the monthly average of the corpus of the fund shall not be less than one hundred crore rupees
• the fund shall not carry on or control and manage, directly or indirectly, any business in India;
• the fund is neither engaged in any activity which constitutes a business connection in India nor has any person acting on its behalf whose activities constitute a business connection in India other than the activities undertaken by the eligible fund manager on its behalf.
• A portfolio means the total holdings of securities and goods belonging to any person
• A portfolio manager means a body corporate which pursuant to a contract with a client advises or directs or undertakes on behalf of the client the management or administration of a portfolio of securities or goods or funds of the client.
• Principal Officer means an employee of the portfolio manager who has been designated as such by the portfolio manager and is responsible for decisions made by the portfolio manager for the management and administration of the portfolio of securities or funds of the client and all other operations of the portfolio manager.

Qualification of Principal Officer

Professional qualification in finance, law, accountancy or business management from the University of CFA Charter from the CFA institute

Experience of at least 5 years in the field of securities market including portfolio manager, stockbroker, investment advisor, research analyst or as fund manager. 

And

Relevant NISM certification

Provided that at least 2 years of relevant experience is in portfolio management or investment advisory services or in the areas related to funding management.

What is Portfolio Manager?

Body corporate registered and licensed by the Securities and Exchange Board of India under the regulation, to-do management and administration of various investment portfolios of their client on the given/agreed terms and conditions with compensation thereon.

Who is Portfolio Manager?

Body corporate-like companies either private or public, Limited Liability Partnership or corporate incorporated outside India are eligible portfolio managers or can be portfolio manager subject to compliance with underlying regulations in terms of the type of entity, principal officer, compliance officer, employee, office space and equipment and capital adequacy thereon.

Why Portfolio Manager?

It is very clear and loud that one can’t be perfect or known for everything available in the scenario. Mean to say, every individual is not well enough to make the best financial plan and do cater for the knowledge of alike portfolio managers. In fact, most people are unaware of it and still lack the time to understand the segment and take the best decision for their future financial planning and investment strategy therefore the special designated designation with its own scope of business activities the license portfolio manager come to picture.

Equipped with the latest information about the various investment opportunity, reducing risk and maximizing the profit and wealth as per the investment plan of any individual are known as Portfolio Managers. The registered licensed person on certain compensation dares to manage the portfolio of various assets of any person to maximize his/her wealth.

• Applicant is a body corporate
• It has the necessary infrastructure like adequate office space, equipment and manpower to effectively discharge the activities
• The applicant has appointed a compliance officer
• Principal Officer with requisite qualification is most
• Over and above Principal Officer and Compliance Officer, one employee should have the following qualifications
• Graduated from University and Experience of at least 2 years in the activities of securities market including portfolio manager, stock broker, investment adviser or a fund manager
• No disciplinary action by Board against a person directly or indirectly connected with the applicant
• The net worth requirement is fulfilled
• Fit and proper criteria are met by the applicant
• Applicant, its director/partner, principal officer, compliance officer or specified employee not to be in any market-related litigation or convicted for any offence involving moral turpitude or has been found guilty of any economic offence.

Capital Adequacy:

The applicant shall have a net worth not less than INR 5 Crore. Net worth refers to the aggregate value of paid-up equity share capital plus free reserve (excluding reserve created out of revaluation) reduced by the aggregate value of accumulated losses and deferred expenditure not written off, including miscellaneous expenses not written off.

Applicant shall make application in Form A of Schedule I accompanies by non-refundable application fees of INR 1, 00,000/-. Validity of registration is perpetual until unless suspended or cancelled by Board. Further Registration Fees of INR 10, 00,000/- at the time of grant of certificate by Board to be deposited. Though there is no concept of renewal and all but every registered Portfolio Manager need to pay INR 5, 00,000/- on interval of three years as to keep its registration in force.

Statistically

As on 26th Feb, 2021 around 360 body corporate are registered as Portfolio Manager in India. Around 48 entity have legal structure of Limited Liability Partnership incorporated under Limited Liability Partnership Act, 2008. Approx. 141 entity are registered as Private Company incorporated under the Companies Act, 2013. Remaining entity around 171 are body corporate registered with Board to act as Portfolio Manager as per data published by SEBI.

• Name of Compliance/Principal Officer, Contact No and Email ID along with Applicant Name
• Copy of PAN Card of applicant
• Registered address proof i.e. rent agreement and utility bills 
• Principal place of business, if other than registered office address
• Certificate of Incorporation/Registration
• Partnership Deed/ Memorandum and Article of Association
• Certified copy of Board Resolution
• Organization structure showing functional responsibilities
• KYC of Directors/Partners, Qualification and Experience Certificate
• Other Directorship and association of Directors/Partners along with interest holding in other Entity
• Details of Key Management Personnel, Qualification and Experience along with Directorship, if they hold if any.
• Declaration and Undertaking
• Name, Contact Number, Mail ID and Copy of PAN Card of Promoter
• Particulars of Compliance Officer, Copy of PAN Card, Qualification, Address and Experience
• Particulars of Principal Officer, Copy of PAN Card, Qualification, Address and Experience
• Bio Date of Principal Officer, NISM Certification
• Number of employees
• Name and activities of associate companies/entities along with ownership details
• Shareholding pattern of Applicant
• Business Plan for at least three years
• Audited/ Un-audited financial statements of Applicant, as the case may be
• Net worth certificate from Statutory Auditor
• Details of Principal Banker and Statutory Auditor
• Banker Report
• Copy of Draft Agreement with Client
• Copy of Draft Disclosure Document and details of custodian