SECURITIES AND EXCHANGE BOARD OF INDIA (PORTFOLIO MANAGERS) REGULATIONS, 1993

3 · 3A. 4 5.

13 · 14. 15. 16.

24 · 25. 26. 27 . 28. 29.

30 · Liability for action in case of default [31 . Omitted by the Securities (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002] [32. Omitted by the Securities (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002] [33. Omitted by the Securities (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002] [34. Omitted by the Securities (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002] [35. Omitted by the Securities (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations; 2002] [36. Omitted by the Securities (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002] [38. Omitted by the Securities (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002]

1 · Short title and commencement-(1) These regulations may be called the Securities and Exchange Board of India (Portfolio Managers) Regulations, 1993.

2 · Definitions.

12 · Inserted by the SEBI (Portfolio Managers) (Amendment) Regulations, 2019,w.e.f: 10-05-2019. 13 Inserted by the SEBI Portfolio Managers) (Amendment) Regulations, 2019, w.e.f: 10-05-2019 14 Substituted by the SEBI (Portfolio Managers) (Amendment) Regulations, 2006, We.f. 05- 07-2006. Prior to substitution, clause (d) as substituted by the SEBI (Portfolio Managers) (Amendment) Regulations; 2002, W.e.f: 11-10-2002 read as under: '(d) "principal officer" means a director of the portfolio manager; who is responsible for the activities of portfolio management and has been designated as principal officer by the portfolio manager; 15 Omitted by the SEBI (Portfolio Managers) (Second Amendment) Regulations, 2006 w.e.f. 07-09-2006. Prior to omission, clause (e) read as under: '(e) "rules" means Securities and Exchange Board of India (Portfolio Managers) Rules, 1992;' 16 Clause (ea) substituted by the SEBI Portfolio Managers) (Amendment) Regulations, 2019, we.f: 10-05-2019. Prior to its substitution, the clause was inserted by the SEBI (Portfolio Managers) (Amendment) Regulations, 2002, W.e.f: 11-10-2002 and read as follows, "(ea) "securities lending" means the securities lending as per the Securities Lending Scheme, 1997 specified by the Board" The words "and the rules omitted by the SEBI (Portfolio Managers) (Second Amendment) Regulations, 2006, w.e.f: 07-09-2006_ 18 The words "or the rules, as the case may be" omitted, ibid:

19 · Inserted by the SEBI (Portfolio Managers) (Second Amendment) Regulations, 2006, W.e.f: 07-09-2006_ 20 Regulation '3' renumbered as '3A' by the SEBI (Portfolio Managers) (Second Amendment) Regulations, 2006, w.e.f. 07-09-2006. Substituted by the SEBI (Portfolio Managers) (Amendment) Regulations, 2004, w.e.f. 27 _ 05-2004. Prior to substitution; sub-regulation (1) read as under: "(1) An application by a portfolio manager for grant of a certificate shall be made to the Board in Form A_

4 · Application to conform to the requirements: Subject to the provisions of sub-regulation (2) of regulation 3, any application, which is not complete in all respects and does not conform to the instructions specified in the form, shall be rejected:

5 · Furnishing of further information; clarification and personal representation.-(1) The Board may require the applicant to furnish further information or clarification regarding matters relevant to his activity of a portfolio manager for the purposes of disposal of the application:

226 · Consideration of application-(1) For considering the grant of certificate of registration to the applicant; the Board shall take into account

22 · Substituted by the SEBI (Portfolio Managers) (Amendment) Regulations, 2002, W.e.f. 11- 10-2002. Prior to substitution; regulation 6 read as under: 6. Consideration of application:~ The Board shall take into account for considering the grant of a certificate, all matters which are relevant to the activities relating to portfolio manager and in particular whether the applicant complies with the following requirements namely: (a) the applicant has the necessary infrastructure like adequate office space , equipments; and manpower to effectively discharge his activities; (b) the applicant has in his employment minimum of two persons who have the experience to conduct the business of portfolio manager; (c) person; directly or indirectly connected with the applicant has not been granted registration by the Board in case of the applicant being a body corporate; Explanation: For the purposes of this clause the expression "directly or indirectly connected" means any person being an associate, subsidiary, inter-connected or group company of the applicant in case of the applicant being a body corporate; the applicant fulfils the capital adequacy requirements specified in regulation 7; e) the applicant; his partner, director or principal officer is not involved in any litigation connected with the securities market and which has an adverse bearing on the business of the applicant; the applicant; his director; partner or principal officer has not at any time been convicted for any offence involving moral turpitude or has been found guilty of any economic offence;

32 · Substituted by the Securities and Exchange Board of India (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations, 2016 w.e.f. 08-12-2016_ Prior to substitution_ regulation 8 read as under: "8_ Procedure for registration _ The Board on being satisfied that the applicant fulfils the requirements specified in regulation 6 shall send an intimation to the applicant and on receipt of the payment of 32registration] fees as specified in 26[clause (1A) of] Schedule Il then grant a certificate in Form B The word "registration" , inserted by the SEBI (Portfolio Managers) (Amendment) Regulations, 2004, W.e.f. 27-5-2004. The words "clause (1A) of" inserted, ibid:

33 · Omitted by the Securities and Exchange Board of India (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations, 2016 W.ef: 08-12-2016. Prior to omission; regulation 9 read as under: {9_ Renewal of certificate.-(1) portfolio manager may, three months before the expiry of the validity of the certificate _ make an application for renewal in Form A 33[along with fees specified in clause 1 of Schedule IL:] (2) The application for renewal, under sub-regulation (1) shall be dealt with in the same manner as if it were an application for grant of a certificate made under regulation 3 33[(3) The Board, on being satisfied that the applicant fulfills the requirements specified in regulation 6, shall send an intimation to the applicant and on receipt of payment of renewal fees as specified in paragraph 2 of Schedule Il, grant a renewal of the certificate:]" The words "along with fees specified in clause of Schedule Il" inserted by the SEBI (Portfolio Managers) Second Amendment) Regulations, 2006, w.e.f. 07-9-2006_ Sub- regulation (3) substituted by the SEBI Portfolio Managers) (Second Amendment) Regulations, 2006, we.f: 07-09-2006. Prior to substitution, sub-regulation (3) read as under: "(3) The Board on being satisfied that the applicant fulfils the requirements specified in regulation 6 for renewal of certificate shall grant a certificate in Form B and send an intimation to the applicant. 34 Inserted by the SEBI (Portfolio Managers) (Second Amendment) Regulations, 2006, W.e.f. 07-09-2006_ 35 The words "or any renewal granted under regulation 9"_ omitted by the Securities and Exchange Board of India (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations; 2016 w.e.f: 08-12-2016_ 36 The words "or renewal, as the case may be;" omitted by the Securities and Exchange Board of India (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations, 2016 w.e.f: 08-12-2016_ 37 The words "or renewal thereof" omitted by the Securities and Exchange Board of India (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations, 2016 W.e.f. 08- 12-2016.

10 · Procedure where registration is not granted.-(1) Where an application for grant of a certificate under regulation 3 39[***] does not satisfy the requirements set out in regulation 6, the Board may reject the application, after giving an opportunity of being heard:

38 · Substituted by the Securities and Exchange Board of India (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations, 2016 W.e.f. 08-12-2016. Prior to substitution regulation 9B was inserted by the SEBI (Portfolio Managers) (Second Amendment) Regulations, 2006, w.e.f: 07-09-2006 and read as under: "9B. Period of validity of certificate. The certificate of registration granted under regulation 8 and its renewal granted under regulation 9, shall be valid for a period of three years from the date of its issue to the applicant: 39 The words or of renewal under regulation 9" omitted by the Securities and Exchange Board of India (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations, 2016 w.e.f. 08-12-2016_

11 · Effect of refusal to grant certificate_ ~= Any portfolio manager whose application for a certificate has been refused by the Board shall on and from the date of the receipt of the communication under sub-regulation (2) of regulation 10 cease to carry on any activity as portfolio manager:

12 · Payment of fees, and the consequences of failure to pay fees.-(1) Every applicant eligible for grant of a certificate shall pay fees in such manner and within the period specified in Schedule II.

12A · For the purposes of this Chapter, unless the context otherwise requires

40 · Inserted by the SEBI (Portfolio Managers) (Amendment) Regulations, 2016,w.e.f: 02-01-2017 .

12B · (1) The provisions of this Chapter shall apply to eligible fund managers exclusively, pertaining to their activities as portfolio managers to eligible investment funds:

12 · C. An existing portfolio manager may act as a portfolio manager to an eligible fund manager if:

12D · An applicant who is a company or a limited Iiability partnership or a body corporate who intends to act as an eligible fund manager may be granted registration under regulation 8 if:

12E · An eligible fund manager shall be required to:

12F · The eligible fund managers shall be exempted from the following provisions pertaining to their activities as portfolio managers to eligible

13 · Code of Conduct: 5 Every portfolio manager shall abide by the Code of Conduct as specified in Schedule III.

42 · Inserted by the SEBI (Portfolio Managers) (Amendment) Regulations, 2019, W.e.f. 10-05-2019.

15 · General responsibilities of a Portfolio Manager~(1) The discretionary portfolio manager shall individually and independently manage the funds of each client in accordance with the needs of the client in a manner which does not partake character of a Mutual Fund, whereas the non-discretionary portfolio manager shall manage the funds in accordance with the directions of the client:

43 · Inserted by the SEBI (Portfolio Managers) (Amendment) Regulations, 2002, W.e:f: 11-10-2002. 44 Substituted by SEBI (Portfolio Managers) (Amendment) Regulations, 2012, W.e.f. 10-2-2012. 45 Inserted, ibid. 46 Inserted by the SEBI (Portfolio Managers) (Amendment) Regulations, 2002, W.e.f. 11-10-2002_

59 · Inserted by SEBI (Portfolio Managers) (Amendment) Regulations, 2012, we.f. 10-2-2012. 60 Inserted by the SEBI (Portfolio Managers) (Amendment) Regulations, 2002, W.e.f: 11-10- 2002.

17 · Maintenance of books of accounts, records, etc.-(1) Every portfolio manager shall keep and maintain the following books of accounts, records and documents namely:

18 · Submission of half-yearly results. Every portfolio manager shall furnish to the Board half-yearly-unaudited financial results when required by the Board with a view to monitor the capital adequacy of the portfolio manager.

19 · Maintenance of books of accounts; records and other documents. The portfolio manager shall preserve the books of account and other records and documents mentioned in any of the regulations mentioned under this chapter for a minimum period of five years

20 · Accounts and audit:

21 · Reports to be furnished to the client-(1) The portfolio manager shall furnish periodically a report to the client; as agreed in the contract; but not

22 · Report on steps taken on Auditor's report-Every portfolio manager shall within two months from the date of the auditors report take steps to rectify the deficiencies, made out in the auditors report

23 · Disclosures to the Board _ A portfolio manager shall disclose to the Board as and when required the following information namely: -

24 · Right of inspection by the Board-(1) The Board may appoint one or more persons as inspecting authority to undertake the inspection of the books of account, records and documents of the portfolio manager for any of the purposes specified in sub-regulation (2).

25 · Notice before inspection.-(1) Before undertaking an inspection under regulation 24, the Board shall give a reasonable notice to the portfolio manager, for that purpose:

26 · Obligations of Portfolio Manager on inspection.-(1) It shall be the duty of every director, proprietor, partner; officer and employee of the portfolio manager who is being inspected to produce to the inspecting authority such books, accounts and other documents in his custody or control and furnish him with the statements and information relating to his activities as a portfolio manager within such time as the inspecting authority may require.

27 · . Submission of report to the Board. S The inspecting authority shall, as soon as may be possible, submit an inspection report to the Board:

29 · Appointment of Auditor_ ~ The Board may appoint a qualified auditor to investigate into the books of account or the affairs of the portfolio manager:

73 · Substituted by the SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, w:e.f. 27-09-2002. Prior to substitution, regulation 28 read as under: 28. Communication of findings etc to the portfolio manager:-(1) The Board shall after consideration of the inspection report communicate the findings to the portfolio manager to give him an opportunity of being heard before any action is being taken by the Board on the findings of the inspecting authority. (2) On receipt of the application, if any, from the portfolio manager, the Board may call upon the portfolio manager to take such measures as the Board may deem fit in the interest of the securities market and for due compliance with the provisions of the Act; rules and regulations_ 74 Substituted for "the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002" by the SEBI (Intermediaries) Regulations, 2008, w.e.f. 26-05-2008.

30 · 76[Liability for action in case of default _ A portfolio manager who contravenes any of the provisions of the Act; Rules or Regulations framed thereunder shall be liable for one or more action specified therein including the action under Chapter V of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008.]

31 · . to 38. 76[* *]

75 · Substituted by the SEBI (Intermediaries) Regulations, 2008, w.e.f: 26-05-2008_ Prior to substitution; regulation 30 as substituted by the SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, we.f. 27-09-2002, read as under: 30. Liability for action in case of default - (1) A portfolio manager who- (a) fails to comply with any conditions subject to which certificate has been granted; (b) contravenes any of the provisions of the Act; rules or regulations; shall be dealt with in the manner provided under the Securities and Exchange Board of India (Procedure for Holding Enquiry by the Enquiry Officer and Imposing Penalty) Regulations, 2002. 76 Omitted by the Securities (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 , W.e.f. 27-09-2002. Prior to their omission; regulations 31 to 38 read as under: "31 _ Suspension of registration-(1) penalty of suspension of registration of portfolio manager may be imposed where the portfolio manager violates the provisions of the Act; rules or regulations; the portfolio manager (a) fails to furnish any information relating to his activity as portfolio manager as required by the Board; (b) furnishes wrong or false information; does not submit periodical returns as required by the Board; does not co-operate in any enquiry conducted by the Board; iii) the portfolio manager fails to resolve the complaints of the investors or fails to give a satisfactory reply to the Board in this behalf; iv) the portfolio manager indulges in manipulating or price rigging or cornering activities; the portfolio manager is guilty of misconduct or improper or unbusinesslike or unprofessional conduct which is not in accordance with the Code of Conduct specified in Schedule IlI; (vi) the portfolio manager fails to maintain the capital adequacy requirement in accordance with the provisions of regulation 7; (vii) the portfolio manager fails to pay the fees; (viii) the portfolio manager violates the conditions of registration; (ix) the portfolio manager does not carry out his obligations as specified in the regulation 32. Cancellation of registration:-A penalty of cancellation of registration of a portfolio manager may be imposed where:

39 · Power of the Board to issue clarifications. In order to remove any difficulties in respect of the application or interpretation of these regulations, the Board may issue clarifications or guidelines in the form of circulars:]

1 · Applicants must submit a completed application form together with appropriate supporting documents to the Board.

2 · It is important that this application form should be filled in accordance with the regulations

6 · All signatures must be original.

1 · 0 PARTICULARS OF THE APPLICANT

1 · 1 Name of the Applicant:

1 · 2 Address Principal place of business/registered office:

1 · 3 Address for Correspondence:

1 · 4 Application to Board for any other intermediary activity:

2 · 0 ORGANISATION STRUCTURE

2 · 1 Objectives: In brief. (Memorandum and Articles of Association to be enclosed).

2 · 2 Date and Place of Incorporation/Establishment:

2 · 3 Status of the Applicant: (e.g. limited company-Private/Public, unlimited company, 79[***] others If listed, names of the stock exchanges and latest share price: to be given:)

2 · 4 Organisation Chart: General Organisation & specific Activity. (i.e. Applied for registration) also state the functional responsibility.

2 · 5 Particulars of all Directors 8[***] and key management personnels:

79 · Words and commas "partnership, proprietary," omitted by SEBI (Portfolio Managers) (Amendment) Regulations, 2008, W.e.f. 11-08-2008_ Words and marks "Ipartnerslproprietor" omitted by SEBI (Portfolio Managers) (Amendment) Regulations, 2008,w.e.f. 11-08-2008_

2 · 6 Number of employees (General and for Specific Intermediaries activity)

2 · 7 Name and activities of associate companiesl concerns

2 · 8 List of major shareholders (holding 5% or more voting shares)

3 · 0 DETAILS OF INFRASTRUCTURAL FACILITIES

3 · 1 Office Space

3 · 2 Office Equipment

3 · 3 Furniture & Fixtures

3 · 4 Communication Facilities

3 · 5 Data Processing Capacity

3 · 6 Computer facility:

4 · 0 BUSINESS PLAN (FOR THREE YEARS)

5 · 0 FINANCIAL INFORMATION

5 · 1 Capital Structure

5 · 2 Deployment of Resources

5 · 4 Net Profit

5 · 5 Name and Address of the Principal Bankers

5 · 6 Name and Address of the Auditors

6 · 0 OTHER INFORMATION

6 · 1 Details of all settled and pending disputes:

6 · 2 Indictment of involvement in any economic offences in the last three years:

6 · 3 Indicate dealing/ trading with any Intermediary who has defaulted with or suspended by any stock exchange authorities or any other authorities:

6 · 4 Any other information considered relevant to the nature of services rendered by the company:

6 · 5 Names of two references from bankers (For applicants other than financial institutions & banking companies)

7 · 0 BUSINESS INFORMATION

7 · 1 Indicate type of activity carried on/ proposed to be carried on:

7 · 22 Indicate the facilities for making decision on portfolio investment:

7 · 3 82[*

82 · Omitted by SEBI (Portfolio Managers) (Amendment) Regulations; 2008, W.e.f: 11-08-2008_ Prior to omission; clause 7.3 read as under: "7.3 Describe portfolio management schemes floated during last yearsl proposed to float during next year. (Enclose copy of typical contract entered with the client for Portfolio Management Services)"

7 · 4 Enclose a copy of list of approved share brokers, involved for Portfolio Management 83[ activities and state whether any of them were suspended/had defaulted with any Stock Exchange authority:-]

7 · 5 Describe Accounting system followed/to be followed for Portfolio Management Services 84[* ].

7 · 6 Indicate various research & database facilities provided:

8 · 0 EXPERIENCE

8 · 1 Experience in Portfolio management activities. Indicate period also.

8 · 2 Experience in other financial services rendered: (Period, Area and Date of Commencement of Activity):

8 · 3 Business handled during the last year:

1 · Types of services offered

2 · No. of portfolio clients

3 · Total amount of funds

4 · Average size of portfolio

5 · Average return to the client

1 · Types of services offered

2 · Number of portfolio clients

6 · 86[*

90 · Substituted for the words Unless renewed, the certificate of registration is valid from to by the Securities and Exchange Board of India (Change In Conditions Of Registration Of Certain Intermediaries) (Amendment) Regulations, 2016 w.e.f. 08-12-2016. 91 Inserted by the SEBI (Portfolio Managers) (Amendment) Regulations, 2002, W.e.f: 11-10- 2002.

92 · The word "Scheme omitted by SEBI (Portfolio Managers) (Amendment) Regulations, 2008, we.f. 11-08-2008_

3 · (a) 98[The fee referred to in paragraph (1A) shall be paid by the portfolio manager within fifteen days from the date of receipt of intimation from the Board under regulation 8 by way of demand draft in favour of 'Securities and Exchange Board of India' payable at Mumbai or at respective regional or local office or by way of by way of direct credit in the bank account through NEFTIRTGSIIMPS or any other mode allowed by RBI:] (b) 99[***]

2 · The money received by a portfolio manager from a client for an investment purpose should be deployed by the portfolio manager as soon as possible for that purpose and money due and payable to a client should be paid forthwith:

100 · Inserted by the SEBI (Payment of Fees and Mode of Payment) (Amendment) Regulations; 2017, W.e.f. 6-3-2017.

5 · A portfolio manager shall not make any exaggerated statement; whether oral or written, to the client either about the qualification or the capability to render certain services or his achievements in regard to services rendered t0 other clients:

10 · (1) A portfolio manager shall not be a party to

1017 · '[11.(a) A portfolio manager or any his employees shall not render, directly or indirectly any investment advice about any security in the publicly accessible media; whether real-time or non-real-time, unless a disclosure of his long or short position in the said security has been made, while rendering such advice.

7 · _

10 · Access to information- (Subject to the provisions of SEBI (Portfolio Managers)Regulations,1993) Provisions enabling client to get the

12 · Billing- Periodicity of billing, whether payment to be made in advance, manner of payment of fees, whether setting off against the account etc: type of documents evidencing receipt of payment of fees.

13 · Liability of portfolio manager- Liability of portfolio manager in connection with recommendations made, to cover errors of judgment; negligence, willful misfeasance in connection with discharge of duties, acts of other intermediaries, brokers, custodians etc:

14 · Liability of client- restricting the liability of the client to the extent of his investment:

15 · Death or Disability- providing for continuation/termination of the agreement in event of client's death/disability, succession, nomination, representation etc. to be incorporated:

16 · Assignment- Conditions for assignment of the agreement by client:

17 · Governing Law- The lawljurisdiction of countrylstate which governs the agreement to be stated.

18 · Settlement of grievancesldisputes and provision for arbitration (Provisions to cover protection of act done in good faith, Risks and losses; redressal of grievances; dispute resolution mechanism, reference for arbitration and the situations under which such rights may arise, may be made):

1 · This Disclosure Document is to be given to the prospective client along with the account opening form (as per Format I) at least two days in advance of signing of the agreement:

2 · This Disclosure Document is to be filed with the Board before it is circulated or issued to any person and every six month thereafter or whenever any material changes are effected therein:

3 · This model Disclosure Document enumerates the minimum disclosure requirements to be contained in the disclosure document: The portfolio manager may make any other disclosures, which in its opinion are material for the investor, provided that such information is a statement of fact and is not presented in an incomplete, inaccurate or misleading manner. It should also be ensured that inclusion of such information does not; by virtue of its nature or manner of presentation, hamper understanding of any information that is required to be included under the model disclosure document

109 · Substituted by the SEBI (Portfolio Managers) (Amendment) Regulations; 2012, W.e.f: 10-2-2012. Prior to substitution, it read as under: "Name and Signature of all the Directors of the Portfolio Manager:-

1 · Declaration by an existing portfolio manager which intends to act as an eligible fund manager (must be signed by two directors or designated partners, as the case may be)

110 · Inserted by the SEBI (Portfolio Managers) (Amendment) Regulations, 2016, W.e.f. 02-01-2017.

2 · Declaration by an applicant who intends to act as a portfolio manager to eligible investment funds (must be signed by two directors or designated partners, as the case may be) We hereby declare that we are applying to SEBI to be registered as a portfolio manager: We intend to provide our services to eligible investment funds: In this regards; we declare that: