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SEBI (Investment Advisers) (Second Amendment) Regulations 2021: A Guide

Investment Advisers
| Updated: Apr 05, 2021 | Category: SEBI Advisory

On 16.03.2021, the Securities and Exchange Board of India (SEBI) has passed Notification No. SEBI/ LAD – NRO/ GN/ 2021/ 11, to pass the SEBI (Investment Advisers) (Second Amendment) Regulations 2021. The said regulations aim to further amend the SEBI (Investment Advisers) Regulations 2021 and will come into effect from the date of publication.

Further, it shall be noted that SEBI has passed the notification by exercising the powers conferred under section 30 (1) read with section (11) (2) (b) of the Securities and Exchange Board of India Act 1992.

In this learning blog, we will discuss in depth the notion of Investment Advisers, together with key changes made by way of the SEBI (Investment Advisers) (Second Amendment) Regulations 2021.

Concept of Investment Advisers

The term Investment Advisers denotes a person or an organisation that provides financial advice to individuals which match their requirements. That means this SEBI Intermediary plays a fiduciary role with their clients.

Further, it shall be noted that this SEBI Intermediary is regulated by the provisions of SEBI (Investment Advisers) Regulation 2013. That means any person or organisation who, for consideration, is involved or willing to involve in the business of offering investment advice to clients or other individuals or a group of individual is required to file an application to obtain registration under IA Regulations unless explicitly exempted under IA Regulations.

Also, it shall be taken under consideration that a sole proprietor is also eligible to make an application for obtaining registration as an Investment Adviser. However, the same will be processed as an individual applicant.

Moreover, the registered Investment Advisers are allowed to provide investment advisory services to Foreign Portfolio Investors. Also, they need to abide by the KYC requirements prescribed by SEBI as well.

Key Provisions of the SEBI (Investment Advisers) (Second Amendment) Regulations 2021

The key provisions of the SEBI (Investment Advisers) (Second Amendment) Regulations 2021 can be summarised as:

Substitution of Regulation 7 (1) (a)

The provisions of the rule 7 sub regulation (1) clause (a) of the SEBI (Investment Advisers) Regulations 2013 will be substituted with the new one as follows:

(a) A professional qualification or a post graduate degree or a post graduate diploma (with a minimum of two years in duration) in the field of accountancy, business management, finance, commerce, economics, banking, capital market, insurance or actuarial science, from a recognised university or an institution acknowledged by the Central Government or by any State Government, or by any recognised foreign university or association or institution, or a professional qualification by finishing a Post Graduate Program in the Securities Markets (Investment Advisory) from NISM of a period not less than one year, or a professional qualification by acquiring a CFA Charter from the CFA Institute[1].

Conclusion

In a nutshell, Investment Advisors are one of the SEBI Intermediaries who are engaged in providing the financial and investment related advices to their clients.

Further, the SEBI on 16.03.2021, by way of a Notification No. SEBI/ LAD – NRO/ GN/ 2021/ 11, has notified the SEBI (Investment Advisors) (Second Amendment) Regulations 2021. Through these rules, SEBI has increased the qualification and education criteria for the individuals or organisations who seek to become Investment Advisors.

Read our article:SEBI Decides to Relax Timelines for Compliance Requirements

Official Copy of the SEBI (Investment Advisers) (Second Amendment) Regulations 2021

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Shivani has completed her B com LLB (Hons) and has the experience of writing various research papers during her college time. Earlier she was working as an Associate in a Delhi based Law Firm, but her interest in writing made her pursue Legal Content Writing as a career. Her core area of interest is in writing about various legal enactments, tax, and finance.

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