SEBI Issues Framework For Advisory, Portfolio Management Services

Markets regulator Securities and Exchange Board of India (SEBI) has come out with a framework related to the fees for investment advisory services for accredited investors.

In addition to this, it has also issued guidelines on exit load charges applicable to the client of the portfolio manager.

In August, SEBI had introduced the concept of "accredited investor" in investment advisers (IA) and portfolio managers rules.

In a circular, the regulator said that in case of accredited investors, the limits and modes of fees payable to the IA will be governed through bilaterally negotiated contractual terms.

In 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 amount of Rs 10 crore.

As per SEBI's norms, a person or entity is identified as an accredited investor on the basis of net worth or income.

Individuals, Hindu Undivided Families, 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.