Master Circular for Investment Advisers

1. Process for Enlistment

SEBI vide circular no. SEBI/HO/MIRSD/MIRSD-POD-1/P/CIR/2024/101 dated July 12, 2024 has granted recognition to BSE Limited as Research Analyst Administration and Supervisory Body (RAASB) and Investment Adviser Administration and Supervisory Body (IAASB) under Regulation 14 of SEBI (Research Analysts) Regulations, 2014 and SEBI (Investment Advisers) Regulations, 2013 for administration and supervision of Research Analysts (‘RAs’) and Investment Advisers (‘IAs’) for a period of five years starting from July 25, 2024. In this regard, Exchange has issued notice no. 20240715-41 dated July 15, 2024.

The existing Investment Advisers (IAs) and entities getting registered as IA are required to maintain the SEBI registration certificate and comply with the Regulations, Byelaws, directions, guidelines and circulars issued by SEBI and the Exchange from time to time.

All the existing SEBI registered IAs holding BASL membership are enlisted on the Exchange w.e.f. July 25, 2024. Applicants desirous of obtaining registration as IA are required to submit their application to the Exchange w.e.f. July 25, 2024, through the online interface on the URL link https://membershipraia.bseindia.com/

The User Manual for enlistment, Standard Operating Process (SOP) including fee structure and checklist of documents for enlistment under various categories are available in the “Investment Adviser” section of the Exchange website on the link:

https://www.bseindia.com/investment advisers.html

2. Guidelines to curb spam SMS and misuse of headers and Content Templates bv unauthorized Telemarketers (UTMS)

In order to ensure that all promotional messages are sent only through Registered Telemarketers (RTMs) and also to stop misuse of Headers and Message Templates which leads to increase in number of fraud/spam, the Telecom Regulatory Authority of India (TRAI) has issued two separate directions on February 16, 2023 to all Access Service Providers (ASPs) under the Telecom Commercial Communication Customer Preference Regulations, 2018 (TCCCPR-2018).

Further, all intermediaries who send bulk SMS hereinafter referred to as Principal Entities (PEs), may be sensitized and the following directions from TRAI may be noted for implementation:

(i) It is seen that many PEs have registered large number of Headers and Content Templates. Unused Headers and Content Templates can be misused by fraudulent entities. Hence, PEs shall review all the Headers and Content Templates registered by them and surrender and close unused Headers and Templates immediately.

(ii) Most misuse of Content Templates is being done due to leaking of template IDs. To avoid the misuse, PEs shall review and re-register all Content Templates immediately.

(iii) Re-verification of Headers and Content Templates shall be done by PEs on a quarterly basis.

(iv) During registration, the PEs may classify the Headers as permanent and temporary as per their own requirement. Time duration of temporary Headers will be given by PEs during registration process after which they will be deactivated.

(v) PEs shall limit the number of variables portion in the Content Template of message to two variables only, provided that, for the reasons to be recorded, a third variable 4 may be allowed in case of exigency. Variables shall be non-contiguous and not separated with space, comma and/or any other special character.

(vi) PEs shall engage only Registered Telemarketers (RTMs) and predeclare the complete chain of Registered Telemarketers engaged by them to their respective Access Providers/Telecom Service Providers (TSPs). It is advisable to keep the number of RTMs in the delivery chain to a minimum. Access Providers shall reject all messages where the chain of RTMs is not defined or does not match.

(vii) PEs or their authorized RTMs in the chain shall not use any telephone numbers for sending any kind of message and do not engage any Unregistered Telemarketers (UTM) for transmission of their message. Any blacklisted RTM should not be given any contract.

(viii) PEs should ensure appropriate provisions in agreement with RTMs so that Headers and Templates shared by them with all RTMs are not misused.

(ix) PEs may obtain the Delivery Report (DLR) from Access Providers/TSPs, in form of total count of messages delivered, through a system generated report.

3. Usage of brand name/trade name by Investment Advisers (IA)

SEBI vide circular no SEBI/HO/MIRSD/ MIRSD-PoD-2/P/CIR/2023/52 dated April 06, 2023, issued circular relating to usage of brand name / trade name by Investment Advisers.

In order to ensure the transparency of usage of brand name/Logo IAs shall ensure that: –

1. The information such as name of the IA as registered with SEBI, its logo, its registration number and its complete address with telephone numbers shall be prominently displayed on portal/web site, if any, notice board, display boards, advertisements, publications, know your client forms and client agreements.
2. The information such as name of the IA/RA as registered with SEBI, its logo, its registration number, its complete address with telephone numbers, the name of the compliance officer, his telephone number and e-mail address, the name, telephone number and e-mail address of the grievance officer or the grievance redressal cell shall be displayed prominently in statements or reports or any other form of correspondence with the client.
3. Disclaimer that “Registration granted by SEBI, enlistment of IA with Exchange and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors” shall be mentioned on portal/web site, if any, notice board, display boards, advertisements, publications, know your client forms, client agreements, statements or reports or any other form of correspondence with the client.
4. SEBI logo shall not be used by IA.

4. Advertisement approval process and Revised Code of Advertisement

Enlisted IAs must submit draft advertisement to be published in print/electronic media through the interface provided on portal for approval. The advertisement should be in conformity with the revised code of advertisement and other notices issued by SEBI/Exchange from time to time. Exchange verifies the draft advertisement and grants approval on the same portal through which it is submitted.

Code of Advertisement for Investment Advisers

1. Advertisement shall include all forms of communication issued by or on behalf of or in relation to Investment Advisers (IA) that may influence investment decisions of any 5 investor/prospective investors. It also includes internal communication to registered clients that may influence investment decisions.

2. Forms of communications to which the present Advertisement Code shall be applicable, shall include pamphlets, circulars, brochures, notices, research reports or any other literature, document, information or material published, or designed for use in any publication or displays (such as newspaper, magazine, sign boards/hoardings at any location), in any electronic, wired or wireless communication (such as electronic mail, text messaging, messaging platforms, social media platforms, radio, telephone, or in any other form over the internet) or over any other audio-visual form of communication (such as television, tape recording, video tape recordings, motion pictures, etc.) or in any other manner whatsoever.

3. Broad guidelines:

3.1 Prior approval for all Advertisement should be obtained by IA enlisted with Exchange (herein referred as enlisted IAs) from Exchange before issuance of Advertisement.

3.2 Any communication aimed at solicitation of clients or making claim of service or performance of IA shall constitute an advertisement irrespective of whether such communication is made to existing or prospective clients.

3.3 Prior approval of Exchange shall be required to be obtained in case the website or other digital platform of IA contains any public outreach or any publicity material that may influence the investment decision of investors/ prospective investors. For websites with basic content, prior approval may not be required. Any communication aimed at solicitation of clients or making any claim of a service or performance of IA shall constitute advertisement irrespective of whether such communication is made to existing/ prospective clients.

3.4 Any Advertisement issued by Authorized Persons/Business Partner/Channel Partner of the enlisted IAs or Influencer/Blogger being paid (directly or indirectly) in any form of consideration by enlisted lAs, shall require prior Exchange approval. Any Advertisement issued by Associated Person on their own shall not be entertained by Exchange.

3.5 Enlisted IAs are hereby advised to undertake adequate due diligence to ensure that content used in the Advertisement strictly adheres to the Code of Advertisement prescribed by Securities and Exchange Board of India (SEBI)/ Exchange from time to time.

3.6 In the event of suspension of any enlisted IA by Exchange /SEBI, the enlisted IA so suspended shall not issue any Advertisement either singly or jointly with any other enlisted IA during the period of suspension.

3.7 Exchange reserves the right to direct the enlisted IA to refrain from issuing any Advertisement for such period as it may deem fit.

3.8 Enlisted IAs should have an internal policy/framework to ensure compliance by itself and Associated Persons/Business Partner/Channel Partner of the enlisted IAs or Influencer/Blogger being paid by enlisted IAs, with the circulars/guidelines issued by Exchange /SEBI for Advertisements.

3.9 Any promotion for the mobile application of the enlisted IA (with or without account opening or Products/Services information) will require prior Exchange approval.

3.10 In case of any third-party issuing Advertisement on any platform without the consent of the enlisted IA, then the enlisted IA shall disown the said Advertisement. Further, in such cases, the enlisted IA is required to take appropriate legal action against such entity and inform Exchange regarding such action and outcome thereof.

3.11 Information contained in the Advertisement should be accurate, complete and unambiguous.

4. Advertisement shall contain:

4.1 Name of the IA as registered with SEBI, complete registered office address, SEBI Registration number / enlistment number allotted by Exchange, logo / brand name / trade name of the enlisted IA, if any, and CIN of the enlisted IA, if applicable

4.2 Information which is accurate, true and complete in unambiguous and concise language.

4.3 Standard warning in legible fonts (minimum font size 10) which states ‘Investment in securities market are subject to market risks. Read all the related documents carefully before investing.’ No addition or deletion of words shall be made to/from the standard warning.

4.4 In audio-visual media based Advertisements, the standard warning in visual media based Advertisement and accompanying voice over reiteration shall be audible in a clear and understandable manner. For example, in standard warning both the visual and the voice over reiteration containing 20 words running for at least 10 seconds may be considered as clear and understandable.

4.5 Whenever the Advertisement is being issued in a language other than English, it will be ensured that the standard warning is accurately translated in the language of the advertisement.

4.6 In case the mode of Advertisement is in the form of SMS/Message/Pop-up, social media, etc. and the details such as full name, logo/brand name/tradename/full registered office address, SEBI registration numbers, enlistment number with Exchange and standard disclaimer are not mentioned, then official website hyperlink should be provided in such SMS/Message/Pop-up, etc., and the website must contain all such details.

The information/disclosures that the advertisement shall contain, include the following:

4.7 If there is a mention of content pertaining to any other business activity such as Mutual Funds, Initial Public Offer (IPO), Insurance, Commodities, Bonds, Loans, etc., in the Advertisement, then respective SEBI registration number(s), where applicable, must be mentioned.

4.8 If the enlisted IA is only a distributor/s for any of the products mentioned in the Advertisement, disclaimer that they are only distributor/s of such products must be specifically mentioned in the disclaimer.

4.9 In case any specific security/securities are displayed in the Advertisement as examples, disclaimer that “The securities quoted are for illustration only and are not recommendatory” should be mentioned. Further, such disclaimer must be on the same slide of the written creative / frame of the video where such specific security / securities are 7 displayed and not at the end of the creative / Advertisement. The logos of the securities quoted shall not be used in the creative/Advertisement.

4.10 Statistical information, charts, graphs, etc., when used, should be supported by their source, i.e., certification by a practicing professional or other authentic verifiable source, if any.

4.11 Where advertising claims are expressly stated to be based on, or supported by independent research or assessment, source of such data and the period it relates to, must be indicated in the Advertisement. Further, authentic source of such information must be provided in the Advertisement.

4.11 Name and Logo of Exchange shall not be used by the enlisted IAs in their creative / Advertisement.

4.12 Advertisement and communications/correspondences with clients shall include the disclaimer that “Registration granted by SEBI, enlistment as IA with Exchange and certification from National Institute of Securities Markets (NISM) in no way guarantee performance of the intermediary or provide any assurance of returns to investors”.

5. Advertisement/Material shall not contain:

5.1 Anything which is prohibited for publication under the law.

5.2 Statements which are false, misleading, biased or deceptive, exaggerated, ambiguous, based on assumptions or projections.

5.3 Any misleading or deceptive testimonials.

5.4 Statements which, directly or by implication or by omission, may mislead the investor.

5.5 Any statement likely to be misunderstood or likely to disguise the significance of the same or any other statement contained in the Advertisement.

5.6 Any statement designed to exploit the lack of experience or knowledge of the investors.

5.7 Any statement that is exaggerated or is inconsistent with or unrelated to the nature and risk and return profile of the product.

5.8 Extensive use of technical or legal terminology or complex language and the inclusion of excessive details which may distract or confuse or induce the investors.

5.9 Reference to any report, analysis, or service as free, unless it actually is available for free and without any condition or obligation.

5.10 Any promise or guarantee of assured or risk-free return to the investors.

5.11 The advertisement shall not imply any assured returns or minimum returns or target return or percentage accuracy or service provision till achievement of target returns or any other nomenclature that gives the impression to the client that the investment advice/recommendation of research report is risk-free and/or not susceptible to market risks and/or that it can generate returns with any level of assurance.

5.12 Any statement which directly or indirectly discredits other advertisements or intermediaries or makes unfair comparisons or ascribes any qualitative advantage over other intermediaries, directly or indirectly.

5.13 Reference to past performance of the IA.

5.14 Superlative terms, such as “BEST”, “No. 1”, “Top Adviser”, “Leading”, “One of the best amongst market leaders”, etc., so as to provide any endorsement of quality or standing of the IA. However, factual details of awards received by the IA from independent organisations may be included.

5.15 Any statement which directly or indirectly discredits other Advertisements or enlisted IA or make unfair comparisons. The Advertisement issued should not imitate any Advertisement by other enlisted IAs.

5.16 Any recommendation/promotion of a specific investment/scrip/contract, in any manner including by way of reference to past performance or research material, shall not be permitted.

5.17. Celebrities shall not form part of the Advertisements including but not limited to, in the form of cartoons/memes, etc. The word ‘celebrity’ means and includes any person:

a. who feature in the top 50 rankings in any celebrity index published by a national publication of repute which is publicly available. The celebrity index should be latest available or at the most one-year old.

b. who has played lead role or one of the lead roles in any mainstream / prominent/ popular movies/TV serials/TV shows/web-series on any of the OTT platforms.

c. who is an Influencer with more than 10 Lacs followers/subscribers (per social media handle) on any social media platform that includes but not limited to YouTube, Instagram, Facebook, Twitter, etc.

d. who being a Sports person has been part of National team of the country to which he belongs or has represented his country in international tournaments/events such as Olympic Games, Asian Games, Commonwealth Games, popular sports events telecast on television such as Kabaddi, Cricket IPL, etc. and competitive games at international level for that given sport, etc.

e. who has been host or one of the hosts or anchors or one of the anchors for any TV programs such as quizzes, cooking shows, news channels, comedy shows, dance shows, song shows, award functions and such other entertainment programs at least for one season or for a minimum of 10 episodes, as the case may be.

f. who has been winner or runners-up in any prominent/popular competitive program aired on TV/OTT platform or any prominent personality who has gone through a series of qualifying rounds (for elimination of competitors) which may be known as qualifying round, quarter finals, semi-finals and finals or by any other name.

g. who is a virtual character (fictional computer ‘people’ or avatars who have the realistic characteristics, features and personalities of humans) that bears influence on their audience/followers.

h. who in the view of Exchange is capable of influencing the opinion of viewers of the Advertisement.

Notwithstanding anything contained in the Code of Advertisement, decision of Exchange shall be final in determining if the person made a part of the Advertisement/material is a celebrity or not.

5.18 Incentive/ referral schemes:

a. Enlisted IAs shall not provide any form of incentive/vouchers/ coupons/ certificates/ tokens, by whatever name called, to their clients/prospective investors for investment advisory account opening or any kind of subscription plan or for downloading mobile application etc. enlisted IAs shall not offer any scheme/plan to clients/prospective investors which compel them to undertake investment advisory with the enlisted IA, in order to avail/continue to avail investment advisory with the enlisted IA.

b. Enlisted IAs or anybody associated with the enlisted IA including the Associated Persons/ Associates/ Channel Partners/ Influencers/ Bloggers shall not promote or incentivize investment advisory, in any form including but not limited to distribution of cashback/ certificates /medals /gifts /prizes/ coupons/ tokens.

c. Enlisted IAs should abide by the guidelines/circulars/notices on incentives/referral schemes issued by SEBI / Exchange from time to time.

5.19 Schemes/leagues/competitions:

a. Enlisted IA shall not deal or directly/indirectly sponsor or be associated in any kind of scheme/league/competition /quiz /game/ lottery/ engagement programs with general public/clients etc. which involves distribution of money/ certificates/ medals/gifts/ prizes/ coupons/ tokens/etc., or any form of incentive, monetary or otherwise, by whatever name called and has the effect of inducing the investors/clients to promote their brand in any manner or promote/incentivize investment.

b. No reference of enlisted lA’s name, logo, etc., can be made in any schemes/ leagues/ competition, etc.

c. Enlisted IAs shall not share any information of their clients with a third party, even with the clients’ consent, in case any third party is involved in launching schemes/ leagues/ competition, etc.

d. Enlisted lAs shall not take any financial liability, including any contingent financial liability, on account of any schemes/leagues/ competition, etc. launched by a third party.

e. Any promise or assurance of any fixed/guaranteed/ indicative returns to prospective/ existing clients. enlisted IAs are not permitted to undertake any business/ activity that is not allowed under the Bye-laws /Regulations /circulars/notices of SEBI / Exchange including operating any scheme of unauthorized collective investment/ portfolio management, promising indicative/guaranteed/ fixed returns/payments etc.

f. Recommendations such as BTST (Buy Today and Sell Tomorrow), ATST (Acquire Today and Sell Tomorrow) etc. cannot be mentioned in the Advertisement. 10 5.22. Logo of other entities cannot be used unless specific approval is obtained from the respective entities and the same was disclosed to Exchange prior to using the same.

6. Advertisements which do not require Exchange Approval

Following shall be exempted from seeking Exchange prior approval, provided there is no reference to the enlisted lA’s product or services or fees plans, or any other promotional activities etc. in the said communication:

a. All communications/material /articles issued by the enlisted IA subject to holding necessary registrations required under the applicable SEBI Regulations:

(i) For educational/information purposes, knowledge sharing/training and has no influence upon the investment decisions of any investor.

(ii) Any communication that is limited to market commentary concerning overall changes in the market on a particular day, or a discussion of economic news wherein there is no mention of any information that can influence the investment decisions of any investor.

b. Wishes /Greetings from company on events/festivals by the enlisted IA which does not involve any form of promotional activities.

c. Press release/ audio and video interviews by enlisted IAs which cannot influence the investment decisions of any investor.

d. All public communications, inviting applications for franchisees/authorized persons, etc. to drive the business expansion of the enlisted IA, provided such communication does not have any information that can influence the investment decisions of any investor.

e. Internal communications to existing clients (with whom IA has a valid agreement) related to advisory services being availed by these clients shall not be considered as advertisement and hence are exempted from approval of Exchange. Such internal communications with existing clients shall however specify that “the information is only for consumption by the client and such material should not be redistributed”. It shall also include standard warnings that “Investment in securities market are subject to market risks. Read all the related documents carefully before investing” and that “Registration granted by SEBI, enlistment as IA with Exchange and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors”.

f. Prior approval is not required for research reports disseminated to existing clients and which do not solicit clients or make any claim of a service or performance of IA. The research report shall be in compliance with all other provisions of the advertisement code.

g. Advertisements that have been approved previously and that are to be used without any change except changes to factual information whether it is issued by enlisted IA, Channel Partner or employee. However, such Advertisements should be issued within one year from the date of approval by Exchange.

h. Third party can publish any content related to the products/services offered by them, that has been approved by Exchange as content to be used by an enlisted IA within one year from the date of such approval.

i. If an Advertisement is approved by Exchange for a specific medium (for e.g., print media) and the same Advertisement without any change in the content is redesigned for a different medium (for e.g., social media, etc.) then no further approval would be required. However, such Advertisements should be issued within one year from the date of approval by Exchange.

7. The present norms and code of Advertisement shall be applicable to any other agency associated with the IA concerned and issuing Advertisement wherein the IA has been named in the Advertisement. Further, copy of the Advertisement shall be retained by the IA for a period as may be prescribed by Exchange / SEBI from time to time.

8. Approval provisions:

a. Enlisted IAs can apply for Advertisement approval by logging on to the portal wherein a separate tab has been provided for Advertisement Application.

b. A maximum number of 3 creatives can be included in one Advertisement for approval.

c. Copy of the complete Advertisement including contents provided in the link shall be submitted in the form of PDF (videos to be uploaded on portal) to Exchange.

d. Enlisted IAs shall provide an undertaking as per the format provided (Annexure A in portal) confirming compliance with the Code of Advertisement. (The format of undertaking is also readily available in Portal – advertisement section)

e. Enlisted IAs shall provide an undertaking as per the format provided (Annexure B in portal) while submitting the draft content/script/Advertisement that has individuals forming a part of it, to Exchange for approval (The format of undertaking is also readily available in Portal – advertisement section).

f. In case a creative is issued in any regional language, enlisted IA shall provide the translated version of the said Advertisement in English.

9. Penalties:

Enlisted IAs not complying with the Code for Advertisement may be subject to suitable action(s) such as imposition of penalty from time to time.

Notwithstanding anything contained in the Code of Advertisement:

a) Enlisted IAs must comply with the code of conduct prescribed under the SEBI (Investment Advisers) Regulations, 2013 and all relevant Bye-laws, Regulations, guidelines, circulars, notices etc., prescribed by SEBI/ Exchange from time to time.

b) Enlisted lAs must comply with any additional guidelines as may be specified by SEBI / Exchange from time to time.

c) Decision of Exchange shall be final in determining whether the Advertisement is complying with this Code of Advertisement.

5. Advertisement Approval Number to be displayed while publishing advertisements

As a measure to inform the public at large about the genuineness of advertisements issued by IAs and approved by Exchange / BASL, IAs are hereby advised to ensure that all the advertisements approved from the date of this circular will display the application number as a part of the said advertisement while publishing the same. The application number is displayed in the advertisement approval letter issued by BASL / Exchange post approval of the advertisement.

The approval number should be displayed as “Advertisement Approval Number” followed by the application number in the advertisement. For e.g. In the advertisement approval letter:

“…. This is with reference to your application no. 000001 dated: XX/XX/XXXX along….. “, the

Advertisement Approval Number is 000001. While displaying the same in the advertisement, it should be displayed as “Advertisement Approval Number:000001”.

Further, advertisements approved by Exchange/BASL but not yet issued as on the date of this circular should display the Advertisement Approval Number at the time of issuance of such advertisements.

6. Advertisement charges applicable to Investment Advisers (IAs)

All the Investment Advisers (IAs) and Research Analysts (RAs) are advised to note the below mentioned processing charges applicable for approval of advertisements:

* Excluding applicable GST

Further, it may be noted that maximum three creatives can be included in one Advertisement for approval.

IAs are advised to login to the URL mentioned below and submit the advertisements for approval on the link below:

https://membershipraia.bseindia.com/

7. Extension of timeline for compliance with enhanced qualification and experience requirements for Investment Advisers

SEBI, vide SEBI (Investment Advisers) (Amendment) Regulations, 2020, required individual investment advisers, principal officers of non -individual investment advisers and persons who are with the investment advisers and associated with investment advice to comply with enhanced qualification and experience requirements by September 30, 2023.

SEBI vide press release No. 21/2023 dated September 21,2023 has allowed time up to September 30, 2025, to comply with these requirements.

8. TRAI – Directions regarding implementation of digital consent acquisition under Telecom commercial communications customer Preference Regulations, 2018 (6 of 2018)

The directions issued by Telecom Regulatory Authority of India (TRAI) regarding implementation of Digital Consent Acquisition under Telecom Commercial Communications Customer Preference Regulations, 2018 (6 of 2018) are attached as Annexure 1

9. TRAI – Directions

The directions were issued by Telecom Regulatory Authority of India (TRAI) regarding compliance with Telecom Commercial Communication Customer Preference Regulations, 2018 (“TCCCPR-2018”).

TRAI has issued the further directions on August 13, 2024, August 20, 2024, and August 30, 2024, copy of same is attached as Annexure 2.

TRAI directions can be accessed on the link Directions | Telecom Regulatory Authority of India (trai.gov.in) or by visiting TRAI website Home | Telecom Regulatory Authority of India | Government of India (trai.gov.in)

SoPs for registering PE-TM chain binding on the DLT platform are attached as Annexure 3.

10. Periodic reporting format for Investment Advisers

SEBI vide Circular No. SEBI/HO/MIRSD/MIRSD-PoD-2/P/CIR/2024/38 dated May 07,2024 mandated submission of periodic reporting for IAs on a half yearly basis.

Accordingly, enlisted IAs can file their periodic submissions for the period ending on March 31, 2025, by April 30, 2025, on the portal.

For the subsequent half-yearly periods, the IAs shall submit periodic reports within 30 days from the end of the respective period.

11. Submission of Annual Compliance Audit Report by Investment Advisers

As per regulation 19(3) of the IA Regulations, IA shall conduct annual audit in respect of compliance with SEBI (Investment Advisers) Regulations, 2013 from a member of Institute of Chartered Accountants of India or Institute of Company Secretaries of India or Institute of Cost Accountants of India and submit the report of the same as may be specified.

An IA shall –

(i) complete the annual compliance audit within six months from the end of each financial year and submit a compliance audit report to IAASB/SEBI within a period of one month from the date of the audit report.

(ii) submit adverse findings of audit, if any, along with action taken thereof duly approved by the individual IA or management of non-individual IA to IAASB/SEBI within a period of one month from the date of the audit report but not later than October 31st of each year for the previous financial year;

and

(iii) maintain on record an annual certificate from a member of ICAI/ ICSI/ICMAI or from an auditor confirming compliance with client level segregation requirements. Such annual certificate shall be obtained within six months of the end of the financial year and form part of compliance audit, in terms of Regulation 19(3) of the IA Regulations.

IA shall publish the status of the compliance audit report on its website and shall also publish the adverse findings of audit, if any, along with the action taken thereof on their website. IA shall provide the compliance audit report to its clients.

IAs shall ensure compliance with the additional audit requirements under this clause starting with for audit report of the financial year ending March 31, 2025.

12. Framework For Centralized Fee Collection Mechanism (CeFCoM) For Investment Advisers (IA)

SEBI vide circular no. SEBI/HO/MIRSD/MIRSD-POD-1/P/CIR/2024/120 dated September 13, 2024, has introduced an optional mechanism for collection of fees by SEBI Registered IAs and RAs from their clients, called ‘Centralized Fee Collection Mechanism (CeFCoM) for IA and RA’. The mechanism shall differentiate unregistered entities from SEBI registered IA/RAs and provide clarity to clients that the fees are being paid to a SEBI registered IA/ RA.

SEBI, in aforementioned circular, has directed BSE Limited – Administration and Supervisory Body (ASB) for IA and RA i.e. IAASB and RAASB to operationalize the CeFCoM and specify the operational framework in this regard.

Accordingly, the operational framework has been provided as follows:

1. IAs/RAs shall provide details of their designated bank account/s (maximum two accounts) to ASB in which payment of fees from its clients shall be received. The designated bank account/s shall be exclusively used for collecting fees from clients for availing their services as an IA/ RA. One of the designated bank account shall serve as default bank account for collection of fees. IA/RA shall have an option to change the default account.

2. CeFCoM shall be operationalised in two phases. In the first phase, it shall be operationalized for IAs/RAs having non-fintech flow i.e. IAs/RAs who do not have an end-to-end digital process through website/app/or such other means for client on-boarding, delivery of services to clients, payments of fees and other related processes. CeFCoM Phase 1 was made operational with effect from October 1, 2024.

3. CeFCoM Phase 2 shall be operationalized for IAs/RAs having fintech flow i.e. IAs/RAs who have an end-to-end digital process through website/app/or such other means for client on- boarding, delivery of services to clients, payments of fees and other related processes. The modalities, process flow and timelines, in this regard, shall be intimated separately.

4. IAs/RAs, having non-fintech flow, can either share the requisite details on the designated portal under CeFCoM using file upload or may have an API (Application Programming Interface) connect for this purpose.

5. The payment modes for collection of fees, under the mechanism, have been provided below:

6. IAs/RAs shall be required to provide the details of their clients to CeFCoM so that the payment links/ payment confirmation/ details of Virtual Account Number, etc. can be shared with the clients. IAs/RAs shall obtain consent from their clients for sharing their details with CeFCoM.

7. The mechanism is optional for IAs/RAs and their clients. For enrolment under CeFCoM, IA/RA may follow the following process:

For enrolment under CeFCoM, the IA/RA must be enlisted with IAASB/RAASB and must have an Enlistment number.

Step1: IA/RA to enlist them on BSE Portal Link: https://membershipraia.bseindia.com/

Step 2: lA/RAs will be provided with SEBI Registration No. and BSE Enlistment No.

Step 3: Post Enlistment, CeFCoM tab shall be enabled for enlisted IA/RAs

Step 4: IAs/RAs may refer the process flow and user manual for CeFCoM (Annexure 4)

For any queries in this regard, you may contact on:

For IAs – [email protected] 022 22725854/8631 For RAs – [email protected] 022 22725854/8631

8. Apart from providing additional recognition to an IA/RA of being a registered intermediary, the mechanism intends to provide following major advantages:

a) Multiple modes for collection of fees from clients

b) Intimation to an IA/RA regarding when a client payment falls due

c) Facility to schedule payment of fees as per convenience of IA/RA and its clients

e) Master data of clients and their fee payment status

f) Facility to track payment of fees by a client

9. Given above, all enlisted IAs/RAs are encouraged to avail the proposed mechanism and enrol under CeFCoM. IAs/ RAs are also advised to spread awareness about CeFCoM among their clients and encourage them to avail this mechanism. IAs/RAs may educate their clients about the advantages of the mechanism.

10. The user manual for IAs/RAs for availing the services of this mechanism is provided at Annexure 4.

13. Association of persons regulated by the Board and their agents with certain Persons

Exchange Notice no. 20241029-2 dated October 29, 2024, and Exchange Notice no. 20250203­7 dated February 03, 2025

SEBI vide circular No. SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2024/143 dated October 22, 2024, has issued guidelines regarding Association of persons regulated by the Board and their agents with certain persons.

Further, SEBI vide circular no. SEBI/HO/MIRSD/ MIRSD-PoD-1/P/CIR/2025/11 dated January 29, 2025, has issued clarifications on provisions related to association of persons regulated by the Board, MIIs, and their agents with persons engaged in prohibited activities.

14. Grievance Redressal/ Escalation Matrix to be displayed by Investment Advisers

All the Investment Advisers (IA) are required to prominently display on their websites the following ‘Grievance Redressal / Escalation Matrix’ and bring it to the notice of their clients:

The abovementioned details would facilitate the complainants to approach the concerned IA before filing complaint to SEBI.

Further, in the absence of the website*, such IA shall display the matrix in all their offices and send emails containing the matrix to their clients.

In the absence of website*:

a) For new clients onboarded, enlisted lAs shall send an email containing the above matrix within seven days of on-boarding.

b) For existing clients, enlisted IAs were required to send the above matrix through email by January 03,2025.

*Website related requirement has been specified under SEBI circular SEBI/HO/MIRSD/MIRSD- PoD/P/CIR/2025/004 dated January 08,2025.

15. Mandatory Compliance with SHe-Box Portal Requirements under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

A new version of SHe-Box has been launched by the Ministry of Women and Child Development (MWCD) which will serve as a centralized repository for data and complaints across the country under “The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013” (SH Act). pertaining to workplace sexual harassment.

In this regard, notice no. 20241227-35 was issued by BSE dated December 27, 2024 for all the Investment Advisers wherein it was advised to submit the details of their Internal Committee, including the names, designations, email addresses, and contact numbers of members and the details of Nodal Officers responsible for SH Act compliance on women- [email protected] within 15 days from the date of the circular.

16. Prior approval for change in control Transfer of shareholdings among immediate relatives and transmission of shareholdings and their effect on change in control.

SEBI vide circular no. SEBI/HO/MIRSD/ MIRSD-PoD-1/P/CIR/2024/16 dated September 13, 2024, issued clarification with respect to transfer of shareholding among immediate relatives and transmission of shareholding in respect of investment advisers (IAs).

17. Guidelines for Investment Advisers

SEBI vide circular no. SEBI/HO/MIRSD/ MIRSD-PoD-1/P/CIR/2025/003 dated January 08, 2025, issued guidelines specified under the amended SEBI (Investment Adviser) Regulations, 2013. The circular covers guidelines pertaining to deposit requirement, registration both as Investment Adviser and Research Analyst, registration as part time investment adviser, appointment of an independent professional as Compliance officer, requirement of website and details on website etc.

18. Notification for amendments in the terms of sub-regulation (2) of Regulation 7 of Securities and Exchange Board of India (Investment Advisers) Regulations, 2013

In terms of sub-regulation (2) of Regulation 7 of Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 (hereinafter referred to as “the IA Regulations, 2013”), the Board had issued Notification No. LAD-NRO/GN/2013-14/13/6109 dated June 19, 2013 and Notification No. LAD-NRO/GN/2013-14/42/118 dated January 27, 2014, as per which Investment Advisers and their associated persons, including their partners and representatives, offering investment advice, were required to obtain certification(s) from the National Institute of Securities Markets by passing NISM Series-X-A: Investment Adviser (Level 1) Certification Examination and NISM Series-X-B: Investment Adviser (Level 2) Certification Examination, as mentioned in the NISM communique No. NISM/Certification/Series-X-A: IA- L1/2013/01 dated May 21, 2013 and NISM communique No. NISM/Certification/Series-X-B: IA-L2/2013/01 dated November 26, 2013 respectively.

In terms of sub-regulation (2) of Regulation 7 of the IA Regulations, 2013, SEBI has notified that an individual Investment Adviser or principal officer of a non-individual Investment Adviser, persons associated with investment advice and the partners of an Investment Adviser being a partnership firm, who are engaged in providing investment advice:

(i) shall obtain certification(s) from the National Institute of Securities Markets by passing the NISM-Series-X-A: Investment Adviser (Level 1) Certification Examination as mentioned in the NISM communique No. NISM/Certification/Series-X-A: IA-L1/2013/01 dated May 21, 2013 and NISM-Series-X-B: Investment Adviser (Level 2) Certification Examination as mentioned in the NISM communique No. NISM/Certification/Series-X-B: IA-L2/2013/01 dated November 26, 2013.

(ii) shall in order to ensure continuity in the compliance with the certification requirements, before expiry of the validity of the existing certification, obtain the certification by passing the NISM-Series-X-C: Investment Adviser Certification (Renewal) Examination as mentioned in the NISM communique No. NISM/Certification/NISM-Series-X-C: Investment Adviser Certification (Renewal) Examination/2024/01 dated November 5, 2024.

19. Most Important Terms and Conditions (MITC) for Investment Advisers

SEBI vide circular no. SEBI/HO/MIRSD/MIRSD-PoD/P/CIR/2025/19 dated February 17, 2025, has issued Most Important Terms and Conditions (MITC) for Investment Advisers.

20. Deposit Requirements

SEBI has introduced the deposit requirement for Investment Advisers (IA) vide its circular no. SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2025/003 dated January 08, 2025.

1) As per the aforesaid SEBI circulars, the deposit requirement details are as follows:

a. The deposit requirements for IAs shall be based on the maximum number of clients of the IAs on any day of the previous financial year, as under:

b. The deposit shall be maintained with a scheduled bank with lien marked in favor of IAASB, in the manner and form as may be specified by IAASB i.e. BSE Limited.

c. The deposit amount may be revised for any change in applicable amount of deposit, based on the maximum number of clients in the previous financial year, at the latest by 30th April of the subsequent financial year.

d. The deposit requirements shall be reviewed by SEBI from time to time.

e. The existing IAs shall ensure compliance with the deposit requirement, at the latest by June 30, 2025, and the new applicants seeking registration as IA, the deposit requirement shall become effective immediately from the date of this circular.

2) In accordance with the point no.(b) stated above, the manner and form in which the deposit/s are proposed to be accepted from IAs is as follows:

a) The Fixed Deposit (FD) to be issued in the name of “BSE Ltd. A/c.______________________________________________________ (Name

of IA)”

b) FD may be maintained with any of the banks mentioned as per Annexure-5 (List of Banks) with lien marked in favor of “BSE Limited”.

c) The term of FD shall be for 5 years or more. Please instruct the Bank to auto renew the principal amount of the FD with the interest to be credited to the account of the IA. In case instruction is not given to the Bank, the principal along with the accrued interest shall be renewed by the Bank on maturity of the FD.

d) IAs shall share soft copy of the Fixed Deposit Receipt (FDR) on email [email protected] and mention in the subject “FDR towards deposit -______ (name of the IA)”. The original FDR shall be duly discharged by affixing revenue stamp of Rs.1 /- on the reverse of the FDR signed and stamped by the authorized signatory. Such original FDR along with the FDR letter from the Bank and covering letter shall be sent by the IAs to BSE’s regional / head office.

e) Format of the FDR letter to be issued by the Bank as prescribed by the Exchange.

f) The FDR shall be auto renewal by the Bank. The Bank renews the FD on the maturity date. IAs shall instruct the Bank in advance for the issuance of renewal letter as per the prescribed format, which shall be submitted by the IA with the Exchange. All the formats relating to deposit are attached as Annexure 5.

g) BSE shall send alerts/reminder mails to IAs to ensure renewal of the FDRs on time.

h) Based on the maximum number of clients available with IAs in the previous financial year, the deposit amount shall be modified as follows:

(i) In the event of an increase in the number of clients, IA will have an option to provide a new FDR with an additional amount or provide a new FDR with the consolidated amount as per the applicable deposit requirement.

(ii) Upon receipt of the original FDR with the consolidated amount, the old FDR shall be released by the Exchange.

(iii) In case of reduction in the number of clients, IA can provide new FDR with the reduced deposit requirement as stated above or continue to maintain the earlier deposit. In case IA provides the new FDR with a revised amount, their old FDR shall be released by the Exchange.

i) Such a deposit shall be available for utilization in case the IA fails to pay dues emanating out of arbitration and conciliation proceedings, if any, under the Online Dispute Mechanism or such other mechanism as may be specified by the Board.