SEBI releases framework for advisory, portfolio management services

The Securities and Exchange Board of India (Sebi) on Tuesday came up with a framework pertaining to fees for investment advisory services for accredited investors. Also, the capital markets regulator put in place guidelines on exit load charges applicable to the client of the portfolio manager.

Sebi in August introduced the concept of ‘accredited investor’ in investment advisors (IA) and portfolio manager rules. In a circular, the regulator said in the case of accredited investors, the limits and mode of fees payable to the IA will be governed through bilaterally negotiated contractual terms. 

In the case of large-value accredited investors, the quantum and manner of exit load applicable to the client of the portfolio manager will be governed through bilaterally negotiated contractual terms, Sebi said in a separate circular.

Large-value accredited investor means an accredited investor who has entered into an agreement with the portfolio manager for a minimum investment of ~10 crore.

Under Sebi rule, a person or entity is identified as an accredited investor on the basis of networth or income.

Individuals, HUFs, family trusts, sole proprietorships, partnership firms, trusts, and body corporates can get accreditation based on financial parameters specified by the regulator, Subsidiaries of depositories and stock exchanges can issue an accreditation certificate to such investors.