Investment Adviser

July 2020

Updation of Knowledge

Professionals have the ability to learn conscientiousness, interpersonal skills, adaptability and integrity. In this competitive world, to retain the professionalism, one has to undergo CPDs and CPEs to enhance their job performance and to sustain the market. Various authorities and institutions has understood the importance of CPD and CPE and started adapting them into their regulations to their professional members.

In this edition, we will be seeing about the (Investment Advisers) and the regulations that SEBI made in relation to their qualification and certification requirements. We will have our usual Legal terms and News Bites related to notifications by MCA, SEBI, RBI, IT and GST following the article.

CEO CS Saranya Deivasigamani,

CEO

Investment Adviser

SEBI, on it’s notification dated 3rd of July, 2020 amended
the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 with various amendments. In this article, we will be seeing specifically about the qualification and certification requirement newly inserted for the investment advisers.

Investment Adviser

An investment adviser is a person, who for consideration, is engaged in the business of providing investment advice to clients or other persons or group of persons.

Eligibility Criteria

To become an investment adviser, one should obtain a certificate of registration from the Board under SEBI (Investment Advisers) (Amendment) Regulations, 2013. manner specified in Second Schedule. 

However, SEBI allows exemptions for the following persons to obtain the certificate such as:

  • Any person who do not specify any particular securities or investment product;
  • Any insurance agent registered with IRDA
  • Any pension advisor registered with Pension Fund Regulatory and Development Authority for such activity; 4
  • Any distributor of mutual funds, who is a member of a self regulatory organisation recognised by the Board
  • Any advocate, solicitor or law firm, who provides investment advice to their clients, incidental to their legal practices
  • Any member of ICAI, ICSI, ICWAI, Actuarial Society of India or any other professional body as may be specified by the Board
  • Any stock broker or sub-broker, portfolio manager registered,  merchant banker
  • Any fund manager
  • Any person who provides investment advice exclusively to clients based out of India:
  • Any representatiAmeve and partner of an investment adviser which is registered under these regulations:
  • Any other person as may be specified by the Board.

Qualification and certification requirement

The entire regulation 7 has been substituted with the following:

Minimum qualification, at all times-

“(a) A professional qualification or post-graduate degree or post graduate diploma (minimum two years in duration) in finance, accountancy, business management, commerce, economics, capital market, banking, insurance or actuarial science from a university or an institution recognized by the Central Government or any State Government or a recognised foreign university or institution or association or a CFA Charter from the CFA Institute.

(b) An experience of at least five years in activities relating to advice in financial products or securities or fund or asset or portfolio management.

(c) Persons associated with investment advice shall meet the following minimum qualifications, at all times-

 (i) a professional qualification as provided in clause (a) of sub-regulation (1) of regulation 7

 (ii) an experience of at least two years in activities relating to advice in financial products or securities or fund or asset or portfolio management:

Provided that investment advisers registered under these regulations as on the date of commencement of these regulations shall ensure that the individual investment adviser or principal officer of a non-individual investment adviser registered under these regulations and persons associated with investment advice comply with such qualification and experience requirements within three years

Provided further that the requirements at clauses (a) and (b) shall not apply to such existing individual investment advisers as may be specified by the Board.

(2) An individual investment adviser or principal officer of a non-individual investment adviser, registered under these regulations and persons associated with investment advice shall have, at all times a certification on financial planning or fund or asset or portfolio management or investment advisory services-

  (a) from NISM; or

  (b) from any other organization or institution including Financial Planning Standards Board of India or any recognized stock exchange in India provided such certification is accredited by NISM.

Provided that fresh certification must be obtained before expiry of the validity of the existing certification to ensure continuity in compliance with certification requirements.

Provided further that fresh certification before expiry of the validity of the existing certification shall not be obtained through a CPE program.”

CPE here means continuing professional education in terms of clause (f) of sub regulation (1) of regulation 2 of the SEBI (Certification of Associated Persons in the Securities Markets) Regulations, 2007.

The investment advisers have be cautious about the expiry of certificate and arrange for the new certificate well in advance than the expiry of the existing certificate. Although Continuing Professional Education (CPE) is require to a professional to enhance their skills, it cannot be considered as the certification requirement for retaining the registration of Investment Adviser.

Legal Terms

Sine die

adv. (with reference to business or proceedings that have been adjourned) with no appointed date for resumption.

NewsBites

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