The Securities and Exchange Board of India (SEBI) on May 02, 2024, issued a circular regarding the Portfolio Managers - Facilitating ease in the digital on-boarding process for clients and enhancing transparency through disclosures.
A working group was constituted to review the present regulatory framework under SEBI (Portfolio Managers) Regulations, 2020 and recommend measures to promote ease of doing business for Portfolio Managers. Based on the recommendations of the working group, a public consultation was carried out.
According to the above, the following has been decided:
• Ease in the digital on-boarding process for clients of Portfolio Managers
o Regulation 22(1) of SEBI (Portfolio Managers) Regulations, 2020, inter-alia states that a portfolio manager shall, before taking up an assignment of management of funds and portfolio on behalf of a client, enter into an agreement in writing with such client that clearly defines the inter-se relationship and set out their mutual rights, liabilities and obligations relating to management of portfolio containing the details as specified in Schedule IV of SEBI (Portfolio Managers) Regulations, 2020.
o Clause 4.3.3 of the Master Circular dated March 20, 2023, for Portfolio Managers (‘Master Circular’), which requires the new clients to separately sign the annexure (on fees and charges) to the agreement between the Portfolio Manager and the client (“PMS-client agreement”), and add in their handwriting that they have understood the fees/charges structure, stands modified as under:
4.3.3 While onboarding a client, the Portfolio Manager shall ensure that:
a) the client has understood the structure for fees and charges.
b) the new client has separately signed the annexure on fees and charges and added a note, that they have understood the structure for fees and charges, in the following manner:
i) handwritten, in case the client is on-boarded through physical mode.
ii) typed using a keyboard or written electronically using fingers/a stylus pen, in case the client is on-boarded through digital mode.
o The above provision shall be applicable from October 01, 2024.
o The standard procedure for on-boarding of client through digital mode shall be specified by APMI, in consultation with SEBI.
For more details, please refer to the circular attached below.
[Circular No. SEBI/HO/IMD/IMD-PoD-1/P/CIR/2024/35]
