The Securities and Exchange Board of India (SEBI) issued Circular No. SEBI/HO/MIRSD/MIRSD-PoD1/P/CIR/2024/147 on October 25, 2024, which updates the compliance requirements for securities advisors non-individual investment (IA). ). The circular introduces two key changes: first, it allows non-individual AIs to obtain an annual certificate of compliance regarding client-level segregation from any auditor, instead of just the statutory auditor, thereby improving operational flexibility . This adjustment aims to simplify the process in line with recommendations to ease compliance burdens. Second, it revises the schedule for submitting periodic reports to the Investment Advisers Administrative and Supervisory Board (IAASB), providing a 30-day deadline after each semi-annual reporting period for submissions. Both changes take effect immediately and aim to improve compliance efficiency while protecting investors’ interests. The IAASB is responsible for communicating these updates to investment advisers and updating relevant regulations.

Securities and Exchange Board of India

Circular no. SEBI/HO/MIRSD/MIRSD-PoD1/P/CIR/2024/147 Dated: October 25, 2024

HAS,
All investment advisors
Administrative and Supervisory Body for Investment Advisers (“IAASB”)

Madam/Sir,

Under: (A) Annual Certificate of Compliance for Client-Level Segregation by Non-Individual Investment Advisers; (B) Timetable for submission of periodic reports

(A) Annual Certificate of Compliance for Client-Level Segregation by Non-Individual Investment Advisers

1. SEBI, see Circular no. SEBI/HO/IMD/DF1/CIR/P/2020/182 dated September 23, 2020 and Master Circular for Investment Advisors dated May 21, 2024 (hereinafter referred to as “Main Circular”), among othersspecifies that a non-individual investment adviser (IA) must maintain on file an annual certificate from its auditor confirming compliance with the client-level segregation requirements as specified in Regulation 22 of the IA Regulation.¹.

2. As a step towards ease of doing business and in terms of the task force’s recommendation for reviewing compliance requirements for investment advisors and research analysts, as in the case of an individual AI, it was decided to authorize a non-individual AI. obtain an annual certificate of compliance from any auditor with respect to the above requirement.

3. In view of the above, paragraph 1.2 (i) (i) of the Master Circular will be amended as follows:

“1.2. (I) Client-level separation of consulting and distribution activities

(i) IAs must maintain on file an annual certificate from an auditor confirming compliance with client-level separation requirements as specified in Regulation 22 of the IA Regulations. This annual certificate must be obtained within 6 months of the end of the financial year and form part of the compliance audit, in accordance with Regulation 19(3) of the IA Regulation.

(B) Deadline for submission of periodic reports – 30 days from the end of the reporting period

4. SEBI, vide Circular no. SEBI/HO/MIRSD/MIRSD-PoD-2/P/CIR/2024/38 dated May 7, 2024 and the main circular dated May 21, 2024 specify the periodic reporting format for AIs. In order to facilitate business, it has been decided to allow a period of 30 days to submit periodic reports to the IAASB. Accordingly, paragraph 20.6.ii of the Master Circular will be revised as follows:

“20.6.ii

For subsequent semesters, implementing agencies submit periodic reports within 30 days from the end of the half-year period for which details are to be provided.

5. The provisions of this circular will come into force with immediate effect.

6. The IAASB’s mission is:

6.1. bring the provisions of this circular to the attention of investment advisors and also disseminate them on its website;

6.2. make necessary amendments to relevant statutes, guidelines, standard operating procedures, rules and regulations for the implementation of the above decisions.

7. This circular is issued in exercise of the powers conferred under Section 11 (1) of Chapter IV of the Securities and Exchange Board of India Act, 1992, Regulations 14, 15 (12) and 22 (5) of the IA Regulations, to protect the interests of investors in securities and promote the development and regulation of securities markets.

8. This circular is available on the SEBI website at sebi.gov.in in the category: “Legal → Circulars”.

Yours faithfully,

Aradhana Verma
General manager
Such. No.: 022 26449633
(email protected)

Remarks :

¹ IA Regulations – SEBI (Investment Advisers) Regulations, 2013