PORTFOLIO MANAGERS REGULATIONS 1993 VS 2020

PORTFOLIO MANAGERSREGULATIONS 1993 VS 2020An ini a ve by& Supported bySignificant changes & Highlighting colours used: PROCEDURE, FINANCIAL, TIME LIMITS/DURATIONSCall: 91 9884088886www.pmsbazaar.com

Sl. No.2 (ad)SECURITIES AND EXCHANGE BOARD OF INDIA (PORTFOLIOSl. No.MANAGERS) REGULATIONS, 1993Definitions:2 d (i)(c)“change in control”, in relation to a portfolio manager being abody corporate, means: in any other case, change in the controlling interest in the bodycorporate;Explanation. For the purpose of sub-clause (ii), the expression“controlling interest” means an interest, whether direct orindirect, to the extent of at least fifty one percent of votingrights in the body corporate;]SECURITIES AND EXCHANGE BOARD OF INDIA (PORTFOLIOMANAGERS) REGULATIONS, 2020 – CHANGESDefinitions:“change of status or constitution” in relation to a portfoliomanager ii) in any other case, change in the controlling interest in thebody corporate;Explanation. For the purpose of sub-clause (ii), the expression“controlling interest” means, an interest, whether direct or indirect, to the extent of atleast fifty one percent of voting rights in the body corporate; right to appoint majority of the directors or to control themanagement directly or indirectly.2 (cb)“portfolio manager” means any person who pursuant to acontract or arrangement with a client, advises or directs orundertakes on behalf of the client (whether as a discretionaryportfolio manager or otherwise) the management oradministration of a portfolio of securities or the funds of theclient, as the case may be;]2 (1)(o) portfolio manager means a body corporate, which pursuantto a contract with a client, advises or directs or undertakeson behalf of the client (whether as a discretionary portfoliomanager or otherwise) the management or administration ofa portfolio of securities or goods or funds of the client, as thecase may be:Provided that the Portfolio Manager may deal in goodsreceived in delivery against physical settlement of commodityderivatives.2 (d)“principal officer” means an employee of the portfolio managerwho has been designated as such by the portfolio manager;2 (1)(p) “principal officer” means an employee of the portfoliomanager who is responsible for: (i) the decisions made by the portfolio manager for themanagement or administration of portfolio of securities or thefunds of the client, as the case may be.(ii) all other operations of the portfolio manager.Significant changes & Highlighting colours used: PROCEDURE, FINANCIAL, TIME LIMITS/DURATIONSPage 2 of 13Call: 91 9884088886www.pmsbazaar.com

6 (2) (c)Consideration of Applicationthe principal officer of the applicant has either–(i) a professional qualification in finance, law, accountancyorbusiness management from a university or an institutionrecognized by the Central Government or any State Governmentor a foreign university; or(ii) an experience of at least ten years in related activities inthe securities market including in a portfolio manager, stock brokeror as a fund manager(iii) a CFA charter from the CFA Institute.d) the applicant has in its employment minimum of two personswho, between them, have at least five years experience21 [inrelated activities in portfolio management or stock brokingor investment management] or in the areas related to fundmanagement;7 (2)Consideration of Application(c) the applicant has appointed a compliance officer;(d)the principal officer of the applicant has–(i)a professional qualification in finance, law, accountancyor business management from a university or an institutionrecognized by the Central Government or any State Governmentor a foreign university or a CFA charter from the CFA institute; anexperience of at least five years in related activities in the securitiesmarket including as a portfolio manager, stock broker, investmentadvisor or as a fund manager.(ii)experience of at least five years in related activities in thesecurities market including in a portfolio manager, stock broker,investment advisor, research analyst or as a fund manager; and(iii)the relevant NISM certification as specified by the Boardfrom time to time.Provided that at least 2 years of relevant experience is in portfoliomanagement or investment advisory services or in the areasrelated to fund management.”Provided further that a portfolio manager, who was granted acertificate of registration prior to the commencement of theSecurities and Exchange Board of India (Portfolio Managers)Regulations, 2020, shall comply with sub clauses (i) and (ii) ofclause (d) of sub-regulation (2) of regulation 7 within thirty-sixmonths from such commencement.In addition to the Principal Officer and Compliance Officer, theapplicant has in its employment at least one person with thefollowing qualifications: (i)graduation from a university or an institution recognizedby the Central Government or any State Government or a foreignuniversity; and(ii)an experience of at least two years in related activitiesin the securities market including in a portfolio manager, stockbroker, investment advisor or as a fund manager:Significant changes & Highlighting colours used: PROCEDURE, FINANCIAL, TIME LIMITS/DURATIONSPage 3 of 13Call: 91 9884088886www.pmsbazaar.com

Provided that any employee of the Portfolio Manager who hasdecision making authority related to fund management shall havethe same minimum qualifications and experience as specified forthe Principal Officer in clause (d) of sub-regulation (2) of regulation7:Provided further that a portfolio manager, who was granted acertificate of registration prior to the commencement of theSecurities and Exchange Board of India (Portfolio Managers)Regulations, 2020, shall comply with sub clauses (i) and (ii) ofclause (e) of sub-regulation (2) of regulation 7 within twelvemonths from such commencement;(g) the applicant fulfills the net worth requirement specified inregulation 9;(h) the applicant, its director or partner, principal officer,compliance officer or the employee as specified in clause (e) isinvolved in any litigation connected with the securities marketthat has an adverse bearing on the business of the applicant;7Capital Adequacy Requirement. The capital adequacy requirement referred to in clause (g) ofregulation 6 shall not be less than the networth of two crorerupees:Significant changes & Highlighting colours used: PROCEDURE, FINANCIAL, TIME LIMITS/DURATIONSNet worth RequirementThe net worth referred to in clause (g) of regulation 7 shall not beless than five crore rupees:Provided that a portfolio manager, who was granted a certificateof registration prior to the commencement of the Securities andExchange Board of India (Portfolio Managers) Regulations, 2020,shall raise its net worth to not less than five crore rupees withinthirty-six months from such commencement: Provided further thatthe portfolio manager shall fulfill the net worth requirements underthese regulations, separately and independently, of the capitaladequacy requirements, if any, for each activity undertaken by itunder the relevant regulations. Explanation. For the purposes ofthis regulation, “net worth” means the aggregate value of paid upequity capital plus free reserves (excluding reserves created out ofrevaluation) reduced by the aggregate value of accumulated lossesand deferred expenditure not written off, including miscellaneousexpenses not written off.Page 4 of 13Call: 91 9884088886www.pmsbazaar.com

9AConditions of registration. (1) Any registration granted underregulation 8 shall be subject to the following conditions, namely:(a)where the portfolio manager proposes to change its statusor constitution, it shall obtain prior approval of the Board forcontinuing to act as such after the change;(b)it shall pay the fees for registration in the manner providedin these regulations;(c)it shall take adequate steps for redressal of grievances ofthe investors within one month of the date of the receipt of thecomplaint and keep the Board informed about the number, natureand other particulars of the complaints received;(d)it shall maintain capital adequacy requirements specified inregulation 7 at all times during the period of the certificate(e)it shall abide by the regulations made under the Act inrespect(f)of the activities carried on by it as portfolio manager.(2)Nothing contained in clause (a) of sub-regulation (1) shallaffect the obligation to obtain a fresh registration under section 12of the Act in cases where it is applicable.11Conditions of registration.11. The certificate of registration granted under regulation 10 shall,inter alia, be subject to the following conditions, namely: (a)the portfolio manager shall abide by the provisions of theAct and these regulations;(b)the portfolio manager shall forthwith inform the Boardin writing, if any information or particulars previously submittedto the Board are found to be false or misleading in any materialparticular or if there is any material change in the informationalready submitted;(c)the portfolio manager shall pay the fees for registration inthe manner provided in these regulations;(d)the portfolio manager shall take adequate steps forredressal of grievances of the investors within one month of thedate of the receipt of the complaint and keep the Board informedabout the number, nature and other particulars of the complaintsreceived; and(e)the portfolio manager shall maintain the net worth specifiedin regulation 9 at all times during the period of the certificate.10Procedure where registration is not granted. (1)Where an application for grant of a certificate underregulation 3 does not satisfy the requirements set out in regulation6, the Board may reject the application, after giving an opportunityof being heard.(2)The refusal to grant registration shall be communicated bythe Board within thirty days of such refusal to the applicant statingtherein the grounds on which the application has been rejected.(3)Any applicant may, being aggrieved by the decision of theBoard under sub-regulation (1), apply within a period of thirtydays from the date of receipt of such intimation, to the Board forreconsideration of its decision.13Procedure where registration is refused1. After considering an application made under regulation 4, if theBoard is of the opinion that a certificate should not be grantedto the applicant, it may reject the application after giving theapplicant a reasonable opportunity of being heard.2. The decision of the Board to reject the application shall becommunicated to the applicant within thirty days of suchdecision.Effect of refusal to grant certificateAny portfolio manager whose application for a certificate has beenrefused by the Board shall on and from the date of the receiptof the communication under sub- regulation (2) of regulation 13cease to carry on any activity as portfolio manager.14Significant changes & Highlighting colours used: PROCEDURE, FINANCIAL, TIME LIMITS/DURATIONSPage 5 of 13Call: 91 9884088886www.pmsbazaar.com