MASTER CIRCULAR
SEBI/HO/IMD/IMD-POD-1/P/CIR/2023/38 March 20, 2023
To,
All Portfolio Managers
Association of Portfolio Managers in India (‘APMI’)
Sir / Madam,
Subject: Master Circular for Portfolio Managers
A. For effective regulation of Portfolio Managers, the Securities and Exchange
Board of India (“SEBI”) has been issuing various circulars from time to time. In
order to enable the stakeholders to have an access to all the applicable
requirements at one place, the provisions of the said circulars issued till
November 30, 2022 are incorporated in this Master Circular for Portfolio
Managers.
B. This Master Circular shall come into force from the date of its issue. The circulars
mentioned in Annexure – Z of this Master Circular shall stand rescinded with
the issuance of the Master Circular. With respect to the directions or other
guidance issued by SEBI, as specifically applicable to Portfolio Managers, the
same shall continue to remain in force in addition to the provisions of any other
law for the time being in force. Terms not defined in this Master Circular shall
have the same meaning as provided under the relevant Regulations.
C. Notwithstanding such rescission,
C.1. anything done or any action taken or purported to have been done or taken
under the rescinded circulars, including registrations or approvals granted,
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fees collected, registration suspended or cancelled, any inspection or
investigation or enquiry or adjudication commenced or show cause notice
issued prior to such rescission, shall be deemed to have been done or taken
under the corresponding provisions of this Master Circular;
C.2. any application made to SEBI under the rescinded circulars, prior to such
rescission, and pending before it shall be deemed to have been made under
the corresponding provisions of this Master Circular;
C.3. the previous operation of the rescinded circulars or anything duly done or
suffered thereunder, any right, privilege, obligation or liability acquired,
accrued or incurred under the rescinded circulars, any penalty, incurred in
respect of any violation committed against the rescinded circulars, or any
investigation, legal proceeding or remedy in respect of any such right,
privilege, obligation, liability, penalty as aforesaid, shall remain unaffected as
if the rescinded circulars have never been rescinded;
D. Pursuant to issuance of this Master Circular, the entities which are required to
ensure compliance with various provisions shall submit necessary reports as
envisaged in this Master Circular on a periodic/ continuous basis.
E. Applicability of certain provisions of this Master Circular:
E.1. The provisions mentioned at paragraphs 2.6 & 2.7 of this Master Circular shall
be applicable with effect from April 01, 2023.
E.2. The provisions mentioned at paragraphs 5.4.3 & 5.4.4 of this Master Circular
shall come into effect from the quarter ending September 2023.
F. This Master Circular is issued in exercise of powers conferred under Section
11(1) of the Securities and Exchange Board of India Act, 1992 to protect the
interests of investors in securities and to promote the development of, and to
regulate the securities market.
G. This Master Circular is available on the SEBI website at https://www.sebi.gov.in/
under the category “Legal -> Master Circulars”.
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Yours faithfully,
Manaswini Mahapatra
General Manager
Investment Management Department
Tel: 022 - 26449375
Email: manaswinim@sebi.gov.in
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TABLE OF CONTENTS
ABBREVIATIONS ....................................................................................................................... 7
1. REGISTRATION AND POST-REGISTRATION ACTIVITY ......................................... 8
1.1. Application procedure for registration as Portfolio Manager ...................... 8
1.2. General Registration Guidelines .......................................................................... 8
1.3. Clarification for Same Group Entities ................................................................. 9
1.4. Co-investment Portfolio Management Services ............................................ 11
1.5. Procedure for seeking prior approval for change in control of SEBI
registered Portfolio Managers ......................................................................................... 12
1.6. Format of Net worth calculation ......................................................................... 14
1.7. Certificate of associated persons in the Securities Markets ...................... 14
2. OPERATING GUIDELINES ............................................................................................ 18
2.1. Guidelines for advertisement by Portfolio Managers ................................... 18
2.2. Maintenance of Clients’ Funds in a separate Bank Account by Portfolio
Managers ................................................................................................................................ 18
2.3. Direct on-boarding of clients by Portfolio Managers ................................... 19
2.4. Supervision of Distributors ................................................................................. 20
2.5. Clarification on minimum investment amount by clients and schemes 21
2.6. Written down policies by Portfolio Manager................................................... 21
2.7. Fair and equitable treatment of all clients ....................................................... 22
3. INVESTMENTS BY PORTFOLIO MANAGERS ......................................................... 25
3.1. Transaction in Corporate Bonds through Request for Quote platform by
Portfolio Management Services (PMS)........................................................................... 25
3.2. Investment in Derivatives .................................................................................... 26
3.3. Participation of Portfolio Managers in Commodity Derivatives Market
in India ................................................................................................................................... 27
3.4. Limits on investment in securities of associates/ related parties of
Portfolio Managers .............................................................................................................. 29
3.5. Prior consent of the client regarding investments in the securities of
associates/related parties.................................................................................................. 30
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3.6. Minimum credit rating of securities for investments by Portfolio
Managers ............................................................................................................................... 32
3.7. Applicability of above provisions: ..................................................................... 33
4. DISCLOSURE REQUIREMENTS .................................................................................. 34
4.1. Material change in Disclosure Document ........................................................ 34
4.2. Clause in Disclosure Document/ Client agreement/ Power of attorney .. 34
4.3. Disclosure of fees and charges.......................................................................... 35
4.4. Publishing of Investor Charter by Portfolio Managers on their
websites ................................................................................................................................. 35
4.5. Reporting of Performance by Portfolio Managers ........................................ 36
4.6. Nomenclature ‘Investment Approach’ .............................................................. 38
4.7. Disclosure of details of related party investments by Portfolio
Managers ............................................................................................................................... 39
5. REPORTING REQUIREMENTS .................................................................................... 41
5.1. Submission of monthly report by Portfolio Managers ................................. 41
5.2. Submission of compliance reports by Portfolio Manager .......................... 42
5.3. Firm-level performance reporting by Portfolio Managers ........................... 43
5.4. Offsite Inspection data reporting to SEBI ........................................................ 44
5.5. Reporting to clients by Portfolio Managers .................................................... 45
6. FEES AND CHARGES .................................................................................................... 46
6.1. Regulation of Fees and Charges ........................................................................ 46
7. GRIEVANCE REDRESSAL ............................................................................................ 50
7.1. Dispute Resolution ................................................................................................ 50
7.2. Disclosure of Investor Complaints by Portfolio Managers on their
websites ................................................................................................................................. 50
ANNEXURES ............................................................................................................................. 51
Annexure 1A: Online Processing of Portfolio Manager Applications ................... 52
Annexure 2A: Guidelines for Advertisements by Registered Portfolio
Managers ................................................................................................................................ 54
Annexure 2B: Code of Conduct for Distributors of Portfolio Management
Services .................................................................................................................................. 56
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Annexure 3A: Format of obtaining the consent from the client .............................. 58
Annexure 4A: Illustration for Annexure on Fees and Charges................................ 61
Annexure 4B: Format of Investor Charter in Respect of Portfolio Management
Services .................................................................................................................................. 64
Annexure 4C: Format for disclosure of Performance of the Portfolio Manager . 74
Annexure 5A: Format for Monthly Report to SEBI ...................................................... 75
Annexure 5B: Offsite Inspection Reporting Formats ................................................. 80
Annexure 5C: Details of reporting requirements as per the provisions of the
Master Circular ..................................................................................................................... 87
Annexure 5D: Format of Quarterly Reporting to Client ............................................. 89
Annexure 7A: Format of Complaint data to be displayed by the Portfolio
Managers ................................................................................................................................ 95
Annexure Z: List of Circulars Rescinded ...................................................................... 97
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ABBREVIATIONS
Alternative Investment Fund AIF
Assets under Management AUM
Association of Mutual Funds in India AMFI
AMFI Registration Number ARN
Bombay Stock Exchange BSE
Chartered Accountant CA
Company Secretary CS
Corporate Bonds CBs
Dealing Team DT
Financial Year FY
Foreign Portfolio Investor FPI
Know Your Client KYC
National Company Law Tribunal NCLT
National Institute of Securities Markets NISM
One-to-many OTM
One-to-one OTO
Portfolio Management Services PMS
Portfolio Manager PM
Request for Quote platform of stock exchanges RFQ
SEBI (Portfolio Managers) Regulations 2020 the PM Regulations
SEBI Complaints Redress System SCORES
Securities and Exchange Board of India SEBI
Time Weighted Rate of Return TWRR
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1. REGISTRATION AND POST-REGISTRATION ACTIVITY
1.1. Application procedure for registration as Portfolio Manager1
1.1.1. All entities desirous to be registered as Portfolio Manager, are required to
file an online application on SEBI Intermediary Portal
(https://siportal.sebi.gov.in)2.
1.1.2. An applicant is required to furnish the application in Form A as specified
in the Securities and Exchange Board of India (Portfolio Managers)
Regulations, 2020 (“PM Regulations”), to SEBI for registration as a
Portfolio Manager. On receipt of ‘Form A’, SEBI may seek further
information for processing the application. Any information sought by SEBI
has to be responded in detail and supported by relevant documents.
1.1.3. The information submitted to SEBI at the time of registration, shall be full
and complete in all respects, otherwise it may delay processing of the
registration application.
1.1.4. Online process for Fresh Registrations and Updation of Information is
given in Annexure 1A of this Master Circular3.
1.2. General Registration Guidelines4
1 SEBI/RPM CIRCULAR NO.2 (2002-2003) dated January 14, 2003
2 SEBI/HO/MIRSD/MIRSD1/CIR/P/2017/38 dated May 02, 2017
3 Online Process of Portfolio Manager applications dated September 21, 2010
4 RPM circular No.1(93-94) dated October 20, 1993
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1.2.1. The registration granted to a portfolio manager under Chapter II of the PM
Regulations is for the principal office as well as for all the branch offices
of the portfolio manager in India.
1.2.2. The portfolio manager shall mention its registration number contained in
the certificate of registration in all the correspondence with SEBI, other
authorities, Stock Exchanges and the clients of the portfolio manager.
1.2.3. With a view to ensuring that all Rules, Regulations, Guidelines,
Notifications etc. issued by SEBI, the Government of India and other
regulatory authorities are complied with, the Portfolio Manager shall
designate a senior officer as compliance Officer, who shall co-ordinate
with regulatory authorities in various matters and provide necessary
guidance as also ensure compliance internally. The Compliance Officer
shall inter alia ensure that the observations made / the deficiencies pointed
out by SEBI in the functioning of the portfolio managers do not recur.
1.2.4. Correspondence relating to registration and clarifications on Guidelines /
Circulars issued by SEBI shall be made only by the principal office of the
portfolio manager and not by any of its branch offices.
1.2.5. The portfolio managers shall have a code of conduct as envisaged under
the Securities and Exchange Board of India (Prohibition of Insider Trading)
Regulations, 2015.
1.3. Clarification for Same Group Entities5
1.3.1. SEBI may consider grant of certificate to an applicant, notwithstanding that
another entity in the same group has been previously granted registration
by SEBI, if the following conditions are fulfilled:
5 SEBI RPM CIRCULAR NO.1 (2002-2003) dated September 17, 2002
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1.3.1.1. The entities are incorporated as separate legal entities.
1.3.1.2. The entities have independent Board of Directors.
Explanation: Independent Board of Directors for this purpose means
that common directors should not be in majority in both the Boards.
1.3.1.3. There is arm’s length relationship with reference to their operations.
1.3.1.4. The key personnel and infrastructure are independently available for
each entity.
1.3.1.5. Each entity has independent regulatory control and supervisory
mechanism.
1.3.2. It is also clarified that whenever as per the above policy, two entities in the
same group are granted registration, any action by way of suspension or
cancellation of registration taken by SEBI against one entity, may entail
action against other entities of the same group, under the Intermediaries
Regulations.
Explanation: For the purposes of this Master Circular, two entities are
considered to be in the same group if:
1.3.2.1. the same person, by himself or in combination with relatives, directly
or indirectly exercises control over both the entities or,
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1.3.2.2. one is an ‘associate company’ of another and for this purpose,
‘associate company’ shall mean ‘associate company’ as defined under
sub-section (6) of section 2 of the Companies Act,2013, or
1.3.2.3. where one entity directly or indirectly exercises ‘control’ over the other
entity and for this purpose, ‘control’ as defined under the Regulation
2(1)(e) of the PM Regulations shall be referred.
1.4. Co-investment Portfolio Management Services
1.4.1. 6The Co-investment portfolio management services shall be provided in
the following manner:
1.4.1.1. A Manager of Category I or Category II Alternative Investment Fund
(“AIF”) who is also a SEBI registered Portfolio Manager, and intends to
act as Co-investment Portfolio Manager and offer Co-investment
services through portfolio management route, shall do so only under
prior intimation to SEBI.
1.4.1.2. Any other Manager of Category I or Category II AIF, who is not a SEBI
registered Portfolio Manager, and intends to act as Co-investment
Portfolio Manager and offer Co-investment services through portfolio
management route, shall seek registration from SEBI as a Portfolio
Manager in terms of the PM Regulations. Pursuant to the grant of
registration, if such Portfolio Manager is desirous of offering portfolio
management services other than Co-investment, the same shall be
subject to compliance with all provisions of the PM Regulations
including eligibility criteria, and with the prior approval of SEBI.
6 SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2021/0000000679 dated December 10, 2021
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1.5. Procedure for seeking prior approval for change in control of SEBI
registered Portfolio Managers7 8
1.5.1. The PM Regulations provides that a Portfolio Manager shall obtain prior
approval of SEBI in case of change in control in such manner as may be
specified by SEBI. Accordingly, it has been decided that all SEBI
registered Portfolio Managers shall comply with the following in case they
propose a change in control:
1.5.1.1. An online application shall be made by Portfolio Manager to SEBI for
prior approval through the SEBI Intermediary Portal
(https://siportal.sebi.gov.in).
1.5.1.2. The prior approval granted by SEBI shall be valid for a period of six
months from the date of such approval.
1.5.1.3. Applications for fresh registration pursuant to change in control shall
be made to SEBI within six months from the date of prior approval.
1.5.1.4. Pursuant to grant of prior approval by SEBI, in order to enable existing
investors/ clients to take well informed decision regarding their
continuance or otherwise with the changed management, the Portfolio
Manager shall inform its existing investors/ clients about the proposed
change prior to effecting the same and give an option to exit without
any exit load, within a period of not less than 30 calendar days, from
the date of such communication.
7 SEBI/HO/IMD-I/DOF1/P/CIR/2021/564 dated May 12, 2021
8 SEBI/HO/IMD-1/DOF1/P/CIR/2022/77 dated June 02, 2022
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1.5.1.5. In matters which involves scheme(s) of arrangement which needs
sanction of the National Company Law Tribunal (“NCLT”) in terms of
the provisions of the Companies Act, 2013, the Portfolio Managers
shall ensure the following:
1.5.1.5.1. The application seeking approval for the proposed change in control
under PM Regulations shall be filed with SEBI prior to filing the
application with NCLT;
1.5.1.5.2. Upon being satisfied with compliance of the applicable regulatory
requirements, in-principle approval shall be granted by SEBI;
1.5.1.5.3. The validity of such in-principle approval shall be three months from
the date of such approval, within which the relevant application shall
be made to NCLT;
1.5.1.5.4. Within 15 days from the date of order of NCLT, Portfolio Manager
shall submit an online application in terms of paragraph 1.5.1.1 of
this Master Circular along with the following documents to SEBI for
final approval:
 Copy of the NCLT Order approving the scheme;
 Copy of the approved scheme;
 Statement explaining modifications, if any, in the approved
scheme vis-à-vis the draft scheme and the reasons for the
same; and
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 Details of compliance with the conditions/ observations
mentioned in the in-principle approval provided by SEBI.
1.5.1.5.5. All other provisions mentioned at paragraphs 1.5.1.2 to 1.5.1.4 of
this Master Circular regarding the procedure for seeking prior
approval for change in control of Portfolio Managers, shall also
apply.
1.6. Format of Net worth calculation9
1.6.1. Following format shall be followed by Portfolio Managers for calculation of
Net worth:
The statement of networth of ……….. based on audited / unaudited accounts
as on ………….
1.7. Certificate of associated persons in the Securities Markets
1.7.1. For employees of Portfolio Managers10
9 SEBI Circular No. IMD/DOF I/PMS/Cir- 5/2009 dated July 31, 2009
10 Gazette No. SEBI/LAD-NRO/GN/2021/49 dated September 7, 2021
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1.7.1.1. The associated persons functioning as principal officer of a Portfolio
Manager or employee(s) of the Portfolio Manager having decision
making authority related to fund management, shall obtain certification
from the National Institute of Securities Markets by passing the NISM-
Series-XXI-B: Portfolio Managers Certification Examination as
mentioned in the communiqué No. NISM/ Certification/Series-XXI-B:
Portfolio Managers (PM) Certification/2021/01 dated June 15, 2021
issued by the National Institute of Securities Markets.
1.7.1.2. The Portfolio Managers shall ensure that all such associated persons
who are principal officers or employees having decision making
authority related to fund management as on the date of this notification
obtain the certification by passing the NISM-Series-XXI-B: Portfolio
Managers Certification Examination within two years from the date11 of
the notification:
Provided that a Portfolio Manager, who engages or employs any such
associated person who is a principal officer or an employee having
decision making authority related to fund management, after the date12
of the Gazette Notification No. SEBI/LAD-NRO/GN/2021/49, shall
ensure that such person obtains certification by passing the NISM-
Series-XXI-B: Portfolio Managers Certification Examination within one
year from the date of their employment.
11 SEBI Gazette No. SEBI/LAD-NRO/GN/2021/49 dated September 7, 2021
12 SEBI Gazette No. SEBI/LAD-NRO/GN/2021/49 dated September 7, 2021
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1.7.2. For distributors of Portfolio Managers13
1.7.2.1. The associated persons, engaged by a Portfolio Manager as a
distributor of the Portfolio Management Services, shall obtain
certification from the National Institute of Securities Markets by passing
the NISM-Series-XXI-A: Portfolio Management Services (PMS)
Distributors Certification Examination as mentioned in the communiqué
No. NISM/Certification/Series-XXI-A: Portfolio Management Services
(PMS) Distributors Certification Examination/2021/01 dated February
16, 2021 issued by the National Institute of Securities Markets.
1.7.2.2. The Portfolio Managers shall ensure that all such associated persons
who are distributors of the Portfolio Management Services as on the
date14 of the notification obtain the certification by passing the NISM-
Series-XXI-A: Portfolio Management Services (PMS) Distributors
Certification Examination within two years from the date of the
notification:
Provided that a portfolio manager, who engages or employs any such
associated person who is a distributor of the Portfolio Management
Services, after the date15 of the notification, shall ensure that such
person obtains certification by passing the NISM-Series-XXI-A:
Portfolio Management Services (PMS) Distributors Certification
Examination within one year from the date of their employment:
13 SEBI Gazette No. SEBI/LAD-NRO/GN/2021/48 dated September 7, 2021
14 SEBI Gazette No. SEBI/LAD-NRO/GN/2021/48 dated September 7, 2021
15 SEBI Gazette No. SEBI/LAD-NRO/GN/2021/48 dated September 7, 2021
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Provided further that an associated person, who being a distributor of
the Portfolio Management Services, has obtained any of the following
registration/ certification as on the date of this notification
a) a valid AMFI Registration Number (ARN)
b) NISM Series-V-A exam certification
shall be exempted from the requirement of obtaining certification by
passing the NISM-Series-XXI-A: Portfolio Management Services
(PMS) Distributors Certification Examination till the validity of the said
registration/ certification.
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2. OPERATING GUIDELINES
2.1. Guidelines for advertisement by Portfolio Managers16
2.1.1. SEBI has formulated a Code of Advertisement governing any
advertisements issued by the Portfolio Managers in connection with their
activities. All Portfolio Managers registered with SEBI are required to
strictly observe the Code of Advertisement set out in Annexure 2A of this
Master Circular.
2.2. Maintenance of Clients’ Funds in a separate Bank Account by Portfolio
Managers17
2.2.1. The PM Regulations18 states that “the portfolio manager shall segregate
each client’s funds and portfolio of securities and keep them separately
from his own funds and securities and be responsible for safekeeping of
clients’ funds and securities.”
2.2.2. With regard to the above, it is clarified that Portfolio Managers may keep
the funds of all clients in a separate bank account maintained by the
Portfolio Managers subject to the following conditions:
2.2.2.1. There shall be a clear segregation of each client’s fund through proper
and clear maintenance of back office records,
2.2.2.2. Portfolio Managers shall not use the funds of one client for another
client,
16 RPM circular No.1(93-94) dated October 20, 1993
17 IMD/DOF I/PMS/Cir- 4/2009 dated June 23, 2009
18 Regulation 24 (14) of the SEBI (Portfolio Managers) Regulations, 2020
Page 18 of 100
2.2.2.3. Portfolio Managers shall also maintain an accounting system
containing separate client-wise data for their funds and provide
statement to clients for such accounts at least on monthly basis,
2.2.2.4. Portfolio Managers shall reconcile the client-wise funds with the funds
in the aforesaid bank account on daily basis.
2.2.3. With respect to investment in short term Liquid Mutual Funds by Portfolio
Managers, it is clarified that pending investment of funds, any short term
deployment of funds in Liquid Mutual Funds for the purpose of cash
management shall be maintained on the lines as per paragraph 2.2.2 of
this Master Circular19.
2.3. Direct on-boarding of clients by Portfolio Managers20
2.3.1. Portfolio Managers shall provide an option to clients to be on-boarded
directly, without intermediation of persons engaged in distribution
services.
2.3.2. Portfolio Managers shall prominently disclose in its Disclosure
Documents, marketing material and on its website, about the option for
direct on-boarding.
2.3.3. At the time of on-boarding of clients directly, no charges except statutory
charges shall be levied.
19 Cir. /IMD/DF-1/16/2012 dated July 16, 2012
20 SEBI/HO/IMD/DF1/CIR/P/2020/26 dated February 13, 2020
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2.3.4. The above provisions with respect to direct on-boarding of clients shall not
be applicable to Co-investment portfolio management services21.
2.4. Supervision of Distributors22
2.4.1. The Portfolio Managers shall:
2.4.1.1. Ensure that any person or entity involved in the distribution of its
services is carrying out the distribution activities in compliance with the
PM Regulations and circulars issued thereunder from time to time.
2.4.1.2. Pay fees or commission to distributors only on trail-basis. Further, any
fees or commission paid shall be only from the fees received by
Portfolio Managers.
2.4.1.3. Ensure that prospective clients are informed about the fees or
commission to be earned by the distributors for on-boarding them to
specific investment approaches.
2.4.1.4. Ensure that distributors abide by the Code of Conduct as specified in
Annexure 2B of this Master Circular.
2.4.1.5. Have mechanism to independently verify the compliance of its
distributors with the Code of Conduct.
2.4.1.6. Ensure that, within 15 days from the end of every financial year, a self-
certification is also received from distributors with regard to compliance
with Code of conduct.
21 SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2021/0000000679 dated December 10, 2021
22 SEBI/HO/IMD/DF1/CIR/P/2020/26 dated February 13, 2020
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2.5. Clarification on minimum investment amount by clients and schemes 23
2.5.1. The Portfolio Managers shall ensure the following;
2.5.1.1. To ensure compliance with the PM Regulations, the first single lump-
sum investment amount received as funds or securities from clients
should not be less than ₹50 Lakh24.
2.5.1.2. Portfolio Managers shall not organize investment portfolios as
‘Schemes’ akin to Mutual Fund Schemes while marketing their services
to clients.
2.6. Written down policies by Portfolio Manager25
2.6.1. Portfolio Managers shall put in place a written down policy (“policy”), in
compliance with the PM Regulations and circulars issued thereunder,
which inter-alia detail the specific activities, role and responsibilities of
various teams engaged in fund management, dealing, compliance, risk
management, back-office, etc., with regard to management of client funds
and securities including the order placement, execution of order, trade
allocation amongst clients and other related matters.
2.6.2. Portfolio Managers shall also put in place a specific policy, in compliance
with the PM Regulations and circulars issued thereunder, which shall inter-
alia provide for the following:
23 Cir. /IMD/DF/16/2010 dated November 02, 2010
24 Gazette notification No. LAD-NRO/GN/2011-12/37/3689 read with Regulations 23(2) of SEBI (Portfolio
Managers) Regulations, 2020
25 SEBI/HO/IMD/IMD-I DOF1/P/CIR/2022/133 dated September 30, 2022
Page 21 of 100
2.6.2.1. Specific situations (not generic) wherein the orders shall be placed for
each client individually or pooled from trading account of Portfolio
Manager.
2.6.2.2. Scenarios / situations in which deviation from the allotment of securities
as intended at the time of placement of order would be permissible, if
at all.
2.6.2.3. Scenarios, wherein, the Portfolio Manager is required to place certain
margins / collaterals in order to execute certain transactions, details on
how such margins / collaterals shall be segregated / placed from
amongst various clients, without affecting the interest of any client.
2.6.2.4. Deviations, if any, shall be on account of exigency only and require
prior written approval of the Principal Officer and Compliance officer of
the Portfolio Manager with a detailed rationale for such deviation.
2.6.3. The aforesaid policies as mentioned at paragraphs 2.6.1 & 2.6.2 shall be
approved by the Board / equivalent body of the Portfolio Manager.
2.7. Fair and equitable treatment of all clients
2.7.1. Portfolio Managers shall ensure that all clients are treated in a fair and
equitable manner and ensure compliance with the following:
2.7.2. Requirements with respect to investments in all instruments: 26
2.7.2.1. Portfolio Managers shall constitute a dealing team (DT) which shall be
responsible for order placement and execution of all orders in
accordance with the aforesaid policies of the Portfolio Manager. DT
26 SEBI/HO/IMD/IMD-I DOF1/P/CIR/2022/133 dated September 30, 2022
Page 22 of 100
may include the Principal Officer or the person appointed in terms of
Regulation 7(2) (e) of the PM Regulations.
2.7.2.2. Portfolio Managers shall ensure that DT is suitably staffed and comply
with the following:
2.7.2.2.1. All conversations of DT shall be only through the dedicated
recorded telephone lines or through emails from authorized email
ids.
2.7.2.2.2. Mobile phones or any other communication devices other than the
recorded telephone lines shall not be allowed inside the dealing
room.
2.7.2.2.3. Access to internet facilities on computers and other devices inside
the dealing room shall be restricted and shall only be used for
activities related to trade execution.
2.7.2.2.4. Entry/access to the dealing room shall be restricted to authorized
employees as defined in the aforementioned policies of the Portfolio
Manager.
2.7.2.2.5. There shall be no sharing of information through any mode, except
for trade execution under the approved policies of the Portfolio
Manager.
2.7.3. For equity, equity-related instruments and Mutual Funds units 27
27 SEBI/HO/IMD/IMD-I DOF1/P/CIR/2022/133 dated September 30, 2022
Page 23 of 100
2.7.3.1. Portfolio Managers with assets under management of INR 1000 crores
or more under discretionary and non-discretionary services, shall have
in place an automated system with minimal manual intervention for
ensuring effective funds and securities management including order
management and allocation of securities to each client.
2.7.3.2. The aforesaid system shall inter-alia clearly capture details with
respect to pre-order placement allocation as well as final allocation of
trades to clients along with instances of deviation, if any, as mentioned
at paragraph 2.6.2.4 above.
2.7.4. Portfolio Managers shall maintain audit trail of all activities related to
management of funds and securities of clients including order placement,
trade execution and allocation. Further, there shall be time stamping with
respect to order placement, order execution and trade allocation.
Page 24 of 100
3. INVESTMENTS BY PORTFOLIO MANAGERS
3.1. Transaction in Corporate Bonds through Request for Quote platform by
Portfolio Management Services (PMS)28
3.1.1. In order to enhance transparency pertaining to debt investments by
Portfolio Managers in Corporate Bonds (“CBs”) and to increase liquidity
on exchange platform, the following shall be followed by Portfolio
Managers:
3.1.1.1. On a monthly basis, Portfolio Managers shall undertake at least 10%
of their total secondary market trades by value in CBs in that month by
placing/seeking quotes through one-to-one (OTO) or one-to-many
(OTM) mode on the Request for Quote platform of stock exchanges
(RFQ).
3.1.1.2. In order to ensure compliance with the abovementioned 10 percent
requirement, Portfolio Managers shall consider the trades executed by
value through OTO or OTM mode of RFQ with respect to the total
secondary market trades in CBs, during the current month and
immediate preceding two months on a rolling basis.
3.1.1.3. All transactions in CBs wherein Portfolio Managers is on both sides of
the trade shall be executed through RFQ in OTO mode. However, any
transaction entered by Portfolio Managers in CBs in OTM mode which
gets executed with another Portfolio Managers, shall be counted in
OTM mode.
28 SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2021/678 dated December 09, 2021
Page 25 of 100
3.1.1.4. Portfolio Managers are permitted to accept the Contract Note from the
stock brokers for transactions carried out in OTO and OTM modes of
RFQ.
3.1.2. Portfolio Managers shall ensure that at least 10% (by value) of their
secondary market trades in CBs in current month and immediate
preceding two months are executed by placing / seeking quotes through
OTO or OTM mode of RFQ. For example, for the month of May 2022, the
secondary market trades executed in CBs in the months of March 2022,
April 2022 and May 2022 shall be considered for the purpose of aforesaid
calculation.
3.2. Investment in Derivatives29
3.2.1. Portfolio Managers are permitted to invest in derivatives, including
transactions for the purpose of hedging and portfolio rebalancing, through
recognized stock exchanges.
3.2.2. Portfolio Managers can invest in derivatives on the terms specified in the
Portfolio Management Agreement. The Agreement should contain
complete details pertaining to the manner and terms of usage of derivative
product including quantum of exposure to derivatives (in absolute terms
and as a percentage of investments in other securities in the portfolio),
type of derivative instruments, purpose of using derivatives, type of
derivative position and the exposure thereof, terms of valuing and
liquidating derivative contracts in the event of liquidation of portfolio
29 SEBI/RPM CIRCULAR NO.3 (2002-2003) dated February 5, 2003, and for clarification on hedging and
portfolio rebalancing, the Portfolio Managers may refer to SEBI Circular No. MFD/CIR/21/25467/2002 dated
December 31, 2002.
Page 26 of 100
management scheme, prior permission from investors in the event of any
changes in the manner or terms of usage of derivative contracts etc.
3.2.3. The total exposure of the portfolio client in derivatives should not exceed
his portfolio funds placed with the Portfolio Manager and the Portfolio
Manager should, in essence, invest and not borrow on behalf of his clients.
3.2.4. It may be noted that investment in derivatives shall be only on the terms
mutually agreed between the Portfolio Manager and the client through the
portfolio management agreement. In the event of the any violation of the
terms of the agreement, the Portfolio Manager shall be responsible.
3.2.5. Portfolio Managers are required to provide necessary disclosures in
Disclosure Document in terms of the PM Regulations.
3.3. Participation of Portfolio Managers in Commodity Derivatives Market in
India30
3.3.1. Portfolio Managers are permitted to participate in Exchange Traded
Commodity Derivatives on behalf of their clients.
3.3.2. The participation of Portfolio Managers in the exchange traded commodity
derivatives shall be subject to the following:
3.3.2.1. Portfolio Managers shall appoint SEBI registered Custodians before
dealing in Exchange Traded Commodity Derivatives.
3.3.2.2. Portfolio Managers may participate in Exchange Traded Commodity
Derivatives on behalf of their clients and such participation shall be in
compliance with all the rules, regulations including the PM Regulations
30 SEBI/HO/IMD/DF1/CIR/P/2019/066 dated May 22, 2019
Page 27 of 100
and circulars/guidelines and position limit norms as may be applicable
to ‘clients’, issued by SEBI and recognized stock exchanges from time
to time.
3.3.2.3. Portfolio Managers may participate in Exchange Traded Commodity
Derivatives after entering into an agreement with the clients. Portfolio
Managers may execute addendums to the agreement with their
existing clients, permitting the Portfolio Managers to participate in the
Exchange Traded Commodity Derivatives on their behalf.
3.3.2.4. Portfolio Managers shall provide adequate disclosures in the
Disclosure Document as well as the agreement with the client
pertaining to their participation in the Exchange Traded Commodity
Derivatives, including but not limited to the risk factors, margin
requirements, position limits, prior experience of the Portfolio Manager
in Exchange Traded Commodity Derivatives, valuation of goods, etc.
3.3.2.5. In case dealing in commodity derivatives lead to delivery of physical
goods, there is a possibility that, the Portfolio Manager remains in
possession of the physical commodity. In such cases, the goods need
to be disposed off at the earliest, within the timelines as agreed upon
between the client and the Portfolio Manager. The responsibility of
liquidating the physical goods shall be with the Portfolio Manager.
3.3.2.6. Since Foreign Portfolio Investors (“FPIs”) are allowed to participate in
the Exchange Traded Commodity Derivatives market, subject to
conditions specified by SEBI; Portfolio Managers shall, while
onboarding FPIs as clients and executing transactions in Exchange
Traded Commodity Derivatives market, ensure that all conditions
specified by SEBI are complied with.
Page 28 of 100
3.3.2.7. Portfolio Managers shall also provide periodic reports to the clients as
per the PM Regulations31 regarding their exposure in Exchange Traded
Commodity Derivatives.
3.3.2.8. Portfolio Managers shall report the exposure in Exchange Traded
Commodity Derivatives under the heading of ‘Commodity Derivatives’
in the monthly reports submitted to SEBI.
3.4. Limits on investment in securities of associates/ related parties of
Portfolio Managers32
3.4.1. Regulation 24 (3A) of the PM Regulations inter-alia provides that the
Portfolio Manager shall ensure compliance with the prudential limits on
investment as may be specified by the Board. Accordingly, the Portfolio
Managers shall ensure the following:
3.4.2. Portfolio Manager shall invest up to a maximum of 30 percent of their
client’s portfolio (as a percentage of the client’s assets under
management) in the securities of their own associates/related parties.
Further, the Portfolio Manager shall ensure compliance with the following
limits:
Security Limit for investment in single Limit for investment across
associate/related party (as multiple associates/related
percentage of client’s AUM) parties (as percentage of
client’s AUM)
Equity 15% 25%
Debt and hybrid securities 15% 25%
Equity + Debt + Hybrid securities 30%
31 Regulation 31 of SEBI (Portfolio Managers) Regulations, 2020
32 SEBI Circular No. SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2022/112 dated August 26, 2022
Page 29 of 100
3.4.3. The aforementioned limits shall be applicable only to direct investments
by Portfolio Managers in equity and debt/hybrid securities of their own
associates/related parties and not to any investments in the Mutual Funds.
3.4.4. Hybrid securities includes units of Real Estate Investment Trusts (REITs),
units of Infrastructure Investment Trusts (InvITs), convertible debt
securities and other securities of like nature.
3.5. Prior consent of the client regarding investments in the securities of
associates/related parties33
Regulation 22(1A) of the PM Regulations provides that the Portfolio
Manager may make investments in the securities of its related parties or
its associates only after obtaining the prior consent of the client in such
manner as may be specified by the Board from time to time. Accordingly,
the Portfolio Managers shall ensure compliance with the following:
3.5.1. Portfolio Managers shall obtain a one-time prior positive consent of client
in the format specified at Annexure 3A (consent form), as a part of the
agreement mandated under Regulation 22(1) of the PM Regulations.
3.5.2. The consent form shall have an option to indicate dissent, in case the
client does not want to undertake any investment in the securities of
associates/related parties of respective Portfolio Manager. The client shall
also have an option to specify a limit on investments in the securities of
associates/related parties of respective Portfolio Manager, below the
ceiling specified in paragraph 3.4.2 above.
33 SEBI Circular No. SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2022/112 dated August 26, 2022
Page 30 of 100
3.5.3. The text and figures of the consent form shall be prominently highlighted
and not be below size 12 font.
3.5.4. For new clients, the aforementioned consent shall be obtained at the time
of entering into agreement, in terms of Regulation 22 (1) of the PM
Regulations (i.e., at the time of onboarding of a new client).
3.5.5. For existing clients, the aforementioned consent shall be obtained by way
of execution of a supplementary agreement with the clients. In cases
where the agreements entered with existing clients contain provision for
obtaining consent for investments through a specified mode, the same
mode can be used for obtaining aforesaid prior consent for investments in
the securities of associates/related parties of the Portfolio Manager as
well.
3.5.6. Portfolio Manager shall not make any investments in the securities of
associates/related parties without the prior consent of the client at the time
of on boarding new clients. For existing clients, fresh investments in the
securities of associates/related parties of Portfolio Managers can be made
only after obtaining consent from the client.
3.5.7. In the event of passive breach of the specified investment limits, (i.e.,
occurrence of instances not arising out of omission and/or commission of
portfolio manager), a rebalancing of the portfolio shall be completed by
Portfolio Managers within a period of 90 days from the date of such
breach. Notwithstanding the same, the client may give an informed, prior
positive consent to the Portfolio Manager for waiver from the rebalancing
of the portfolio to rectify any passive breach of the investment limits.
3.5.8. Such requirement of rebalancing in the event of a passive breach of
investment limits shall be suitably disclosed in the consent form mentioned
Page 31 of 100
at paragraph 3.5.2 above and any waiver from the same shall also be
obtained in the same document.
3.5.9. In accordance with Regulation 27 (1) of the PM Regulations, Portfolio
Managers shall maintain records and documents pertaining to:
a) Prior positive consent or dissent, as the case may be.
b) Instances of the passive breach of investment limits, if any.
c) Steps taken, if any to rectify the passive breach of investments limits.
d) Waiver obtained from the client regarding rebalancing in the event of a
passive breach of investment limits.
3.6. Minimum credit rating of securities for investments by Portfolio
Managers 34
3.6.1. Regulation 24 (3C) of the PM Regulations provides that Portfolio
Managers shall not be allowed to invest clients’ funds in unrated securities
of their related parties or their associates. Further, Regulation 24 (3E) of
the PM Regulations provides that the Portfolio Manager shall ensure
investment of its clients’ funds on the basis of the credit rating of securities
as may be specified by the Board. Accordingly, with respect to
investments in debt and hybrid securities, the Portfolio Managers shall
ensure compliance with the following:
3.6.2. Portfolio Managers offering discretionary portfolio management services
shall not make any investment in below investment grade securities.
34 SEBI Circular No. SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2022/112 dated August 26, 2022
Page 32 of 100
3.6.3. Portfolio Managers offering non-discretionary portfolio management
services shall not make any investment in below investment grade listed
securities. However, Portfolio Manager may invest up to 10% of the assets
under management of such clients in unlisted unrated securities of issuers
other than associates/related parties of Portfolio Manager. The said
investment in unlisted unrated debt and hybrid securities shall be within
the maximum specified limit of 25% for investment in unlisted securities
under Regulation 24(4) of the PM Regulations.
3.7. Applicability of above provisions: 35
3.7.1. The requirements as specified at paragraphs 3.4, 3.5 & 3.6 above and in
Regulations 22 (1A), 22(4) (da) & (db), 24 (3A) to 3(E) of the PM
Regulations shall not be applicable for advisory portfolio management
services, co-investment portfolio management services and for client
categories who in turn manage funds under government mandates and/or
are governed under specific Acts of State and/or Parliament.
3.7.2. Notwithstanding the above, for advisory portfolio management services,
Portfolio Managers shall make suitable disclosure to the client regarding
conflict of interest with respect to investments in the securities of the
associates/related parties, while giving advice. The term “associate” for
this purpose shall have the same meaning as defined under explanation
to Regulation 24 (3C) of the PM Regulations. Further, Portfolio Managers
shall disclose the credit rating of all securities, while giving advice.
35 SEBI Circular No. SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2022/112 dated August 26, 2022
Page 33 of 100
4. DISCLOSURE REQUIREMENTS
4.1. Material change in Disclosure Document36
4.1.1. Material change, for the purpose of the PM Regulations37, shall include
change in control of the Portfolio Manager, Principal Officer, fees charged,
charges associated with the services offered, investment approaches
offered (along with the impact of such change) and such other changes as
specified by SEBI from time to time.
4.2. Clause in Disclosure Document/ Client agreement/ Power of attorney38
4.2.1. It has come to the notice of SEBI while perusing disclosure documents/
agreements/ Power of Attorney entered into by the Portfolio Managers
with the clients that many Portfolio Managers are using the following
clause or a similar clause.
‘The portfolio managers’ decision in deployment of the Clients’ account is
absolute and final and can never be called in question or be open to review
at any time during currency of the agreement or any time thereafter.’
4.2.2. It is felt that every client should have the prerogative to question the
decision of portfolio manager and the exercise of discretion by him.
4.2.3. Therefore, it is advised that Portfolio Managers who have incorporated the
said clause or similar clause shall modify it as below:-
‘The portfolio managers’ decision (taken in good faith) in deployment of the
Clients’ account is absolute and final and cannot be called in question or be
36 SEBI/HO/IMD/DF1/CIR/P/2020/26 dated February 13, 2020
37 Regulation 22 (7) of the SEBI (Portfolio Managers) Regulations, 2020
38 SEBI/IMD/CIR No.1/ 70353 /2006 dated June 28, 2006
Page 34 of 100
open to review at time during the currency of the agreement or any time
thereafter except on the ground of malafide, fraud, conflict of interest or
gross negligence.
4.3. Disclosure of fees and charges39
4.3.1. To ensure transparency and adequate disclosure regarding fees and
charges, the client agreement shall contain a separate annexure which
shall list all fees and charges payable to the portfolio manager. The said
annexure shall contain details of levy of all applicable charges on a sample
portfolio of Rs.50 lacs40 over a period of one year. The fees and charges
shall be shown for 3 scenarios viz. when the portfolio value increases by
20%, decreases by 20% or remains unchanged. An illustration of the same
is enclosed as Annexure 4A of this Master Circular.
4.3.2. All text and figures in the annexure on fees and charges shall be at least
in size 11 font.
4.3.3. New clients shall be required to separately sign the annexure on fees and
charges and add in their own handwriting that they have understood the
fees/ charges structure.
4.4. Publishing of Investor Charter by Portfolio Managers on their
websites41
4.4.1. With a view to enhancing awareness of investors about the various
activities which an investor deals with while availing the services provided
39 SEBI Cir. /IMD/DF/13/2010 dated October 5, 2010
40 Clause 3 (v) of SEBI/HO/IMD/DF1/CIR/P/2020/26 dated February 13, 2020
41 SEBI/HO/IMD/IMD-II_DOF7/P/CIR/2021/681 dated December 10, 2021
Page 35 of 100
by portfolio managers, an investor charter has been prepared by SEBI,
which is enclosed as Annexure 4B of this Master Circular.
4.4.2. The investor charter is a document in an easy to understand language. It
details different services provided by the Portfolio Managers to the
investors along with estimated timelines, like account opening, agreement
with the portfolio manager, periodic statements to the investors, investor
grievance redressal mechanism, responsibilities of investors etc. at one
single place for ease of reference. All registered Portfolio Managers are
advised to bring to the notice of their clients the Investor Charter by
prominently displaying on their websites.
4.5. Reporting of Performance by Portfolio Managers
4.5.1. To ensure compliance with the PM Regulations42, Portfolio Managers shall
disclose the performance of portfolios grouped by investment category for
the past three years as per Annexure 4C of this Master Circular43.
4.5.2. Performance Benchmark reporting to clients44 :
4.5.2.1. All portfolio managers are required to disclose the performance of their
portfolios to their clients, including disclosure of the performance
indicators calculated on the basis of ‘time weighted rate of return’45
method taking each individual category of investments for the
immediately preceding three years in case of discretionary portfolio
managers. In order to make the investors fully aware about how their
funds have been deployed and also to give them an objective analysis
42 Regulation 22(4)(e) & Regulation 22(6) of SEBI (Portfolio Managers) Regulations, 2020
43 Cir. /IMD/DF/16/2010 dated November 02, 2010
44 IMD/PMS/CIR/1/21727/03 dated November 18, 2003
45 Regulation 22(4)(e) of the SEBI (Portfolio Managers) Regulations, 2020
Page 36 of 100
of the performance of the portfolios being managed by the portfolio
managers on discretionary basis in comparison with the rise or fall in
the markets, portfolio managers shall disclose the performance of
benchmark indices in the periodical reports to be furnished to the client
in terms of the PM Regulations46.
4.5.2.2. The portfolio managers may select any of the indices available, e.g.
BSE (Sensitive) index, S&P CNX Nifty, BSE 100, BSE 200 or S&P CNX
500, depending on the investment objective and portfolio of the client.
These benchmark indices may be decided by the portfolio managers
and any change at a later date shall be recorded and justified with
specific reasons thereof.
4.5.2.3. As the purpose of introducing benchmarks is to indicate the
performance of the portfolios vis-à-vis markets to the investors, the
portfolio managers may give performance of more than one index if
they so desire. Also, they have the option to give their management
perception on the performance of their schemes.
4.5.2.4. The Boards of portfolio managers may review the performance of the
funds managed by them for each client separately in their meetings
and should take corrective action wherever necessary. They may also
compare the performance of the portfolios with benchmarks.
4.5.3. In relation to performance of the portfolio manager, it is also clarified that
the Portfolio Managers shall:47
46 Regulation 31 of the SEBI (Portfolio Managers) Regulations, 2020
47 SEBI/HO/IMD/DF1/CIR/P/2020/26 dated February 13, 2020
Page 37 of 100
4.5.3.1. Consider all cash holdings and investments in liquid funds, for
calculation of performance.
4.5.3.2. Report performance data net of all fees and all expenses (including
taxes).
4.5.3.3. Clearly disclose any change in investment approach that may impact
the performance of client portfolio, in the marketing material.
4.5.3.4. Ensure that performance reported in all marketing material and website
of the Portfolio Manager is the same as that reported to SEBI.
4.5.3.5. Ensure that the aggregate performance of the Portfolio Manager (firm-
level performance) reported in any document shall be same as the
combined performance of all the portfolios managed by the Portfolio
Manager.
4.5.3.6. Provide a disclaimer in all marketing material that the performance
related information provided therein is not verified by SEBI.
4.6. Nomenclature ‘Investment Approach’48
4.6.1. The information about Investment Approaches offered by Portfolio
Managers, shall be uniform across all types of regulatory reporting, client
reporting, disclosure document, marketing materials and any such
document which refer to services offered by Portfolio Managers.
4.6.2. Any description of investment approach provided by Portfolio Managers
shall, inter alia, include:
48 SEBI/HO/IMD/DF1/CIR/P/2020/26 dated February 13, 2020
Page 38 of 100
4.6.2.1. investment objective
4.6.2.2. description of types of securities e.g. equity or debt, listed or unlisted,
convertible instruments, etc.
4.6.2.3. basis of selection of such types of securities as part of the investment
approach
4.6.2.4. allocation of portfolio across types of securities
4.6.2.5. appropriate benchmark to compare performance and basis for choice
of benchmark
4.6.2.6. indicative tenure or investment horizon
4.6.2.7. risks associated with the investment approach
4.6.2.8. other salient features, if any.
4.7. Disclosure of details of related party investments by Portfolio Managers
49
4.7.1. Regulations 22 (4) (da) & (db) of the PM Regulations provides that the
Portfolio Manager shall disclose in the Disclosure Document the details of
its diversification policy and the details of investment of clients’ funds by
the Portfolio Manager in the securities of its related parties or associates.
Accordingly, the Portfolio Manager shall ensure compliance with the
following:
4.7.2. Disclosure of the details of investment of clients’ funds in the securities of
associate/related parties in the Disclosure Document under the head
“Details of investments in the securities of related parties of the Portfolio
Manager”, in the following format:
49 SEBI Circular No. SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2022/112 dated August 26, 2022
Page 39 of 100
Investments in the securities of associates/related parties of Portfolio Manager:
Sr. Investment Name of Investment amount (cost of Value of investment as on percentage of total
No. Approach, the investment) as on last day of last day of the previous AUM as on last day
if any associate/ the previous calendar calendar quarter (INR in of the previous
related quarter (INR in crores) crores) calendar quarter
party
4.7.3. Portfolio Managers shall ensure that any material changes in the above
information is updated in the Disclosure Document and uploaded on their
respective websites within 7 days.
Page 40 of 100
5. REPORTING REQUIREMENTS
5.1. Submission of monthly report by Portfolio Managers
5.1.1. 50All Registered Portfolio Managers are required to submit monthly report
regarding their portfolio management activity as per the format enclosed
as Annexure 5A51 of this Master Circular.
5.1.2. All Registered Portfolio Managers shall upload the report on SEBI
Intermediaries Portal within 7 working days of the end of each month52
and there is no requirement of sending hard copy of the said report to
SEBI.
5.1.3. In the said report data pertaining to Assets under Management (“AUM”) of
the portfolio manager as on the last calendar day of each month shall be
indicated in Rupees in crores.
5.1.4. Procedure to upload monthly report on portal is as follows:
5.1.4.1. Log on to SEBI Portal at https://siportal.sebi.gov.in using the
Username and Password provided at the time of Registration/ Renewal
as a portfolio manager.
5.1.4.2. Select the portfolio manager tab
5.1.4.3. Select the link: PM Monthly Report
5.1.4.4. Fill the data in the format provided
5.1.4.5. Save the data and then Submit
50 SEBI/IMD/PMS/CIR-3/2009 dated June 11, 2009
51 Revised format as per SEBI circular SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2021/0000000679 dated December
10, 2021 to include details of Co-investment Portfolio Management services offered by Portfolio Manager
52 SEBI/HO/IMD/DF1/CIR/P/2020/26 dated February 13, 2020
Page 41 of 100
5.1.5. In terms of the PM Regulations53, Compliance Officer of the portfolio
managers shall also be responsible for ensuring compliance with this
Master Circular.
5.2. Submission of compliance reports by Portfolio Manager54
5.2.1. With effect from Financial Year 2019-20, Portfolio Managers are required
to submit the following information to SEBI:55
5.2.1.1. A certificate from the qualified Chartered Accountant certifying the net-
worth as on March 31, every year based on audited account within 6
months from the end of Financial Year.
5.2.1.2. A certificate of compliance with PM Regulations and circulars issued
thereunder, duly signed by the Principal Officer, within 60 days of end
of each financial year. Further, details of non-compliance along with
the corrective actions, if any, duly approved by Board of the Portfolio
Manager.
5.2.2. Submission of Corporate Governance Report:
5.2.2.1. Boards of the Portfolio Managers should review the compliance of
regulations in their periodical meetings. They should develop a system
of getting quarterly reports of compliance of SEBI Regulations and
Guidelines and also that due diligence has been exercised by their
officials in their operations and that the interests of investors are
protected. Such reports may be placed before the Boards of the
53 Regulation 34 of the SEBI (Portfolio Managers) Regulation, 2020
54 IMD/PMS/CIR/1/21727/03 dated November 18, 2003
55 SEBI/HO/IMD/DF1/CIR/P/2020/26 dated February 13, 2020
Page 42 of 100
Portfolio Managers by the compliance officers. Boards of the Portfolio
Managers should also review redressal of investors’ grievances. Any
deficiency letters or warning letters issued to the Portfolio Managers by
SEBI should also be placed before the Boards of the Portfolio
Managers.
5.2.2.2. There shall be internal audit by a practicing Chartered Accountant
(“CA”) or Company Secretary (“CS”) so as to judge the quality of
internal procedures being followed by the Portfolio Manager. The
report of the internal audit shall be submitted to the Board of the
Portfolio Manager.
5.2.2.3. Portfolio Managers shall exercise due diligence in all their operational
activities.
5.2.2.4. Portfolio Managers shall report to SEBI on compliance with the
provisions of the above guidelines while submitting the annual reports.
The report should reach SEBI within thirty days from the end of the
financial year.
5.2.3. Failure to submit reports as mentioned in this master circular shall
constitute a default and render the Portfolio Managers liable for action
under the Intermediaries Regulations.
5.3. Firm-level performance reporting by Portfolio Managers56
5.3.1. The firm-level performance data of Portfolio Managers shall be audited
annually. Confirmation of compliance with paragraph 4.5.3 of this Master
Circular shall be reported to SEBI within sixty days of end of each financial
56 SEBI/HO/IMD/DF1/CIR/P/2020/26 dated February 13, 2020
Page 43 of 100
year. The said report to SEBI shall be certified by the Directors/Partners
of the Portfolio Manager or by person(s) authorized by the Board of
Directors/Partners of the Portfolio Manager.
5.4. Offsite Inspection data reporting to SEBI
5.4.1. As a part of off-site inspection and surveillance of Portfolio Managers and
to monitor the compliance of the PM Regulations and circulars issued
therein, SEBI has framed the data structure and all the Portfolio Managers
are required to furnish the data to SEBI under the following
heads/reporting formats:
S. No. Table Name
1 PM Master
2 Client Master
3 Client Folio Master
4 Client Folio AUM
5 Client Capital Transactions
6 PMS Pool Demat Account Holding
7 Client Holding Master
8 PM Level Expense
9 Client Expense Master
5.4.2. The data to be submitted by Portfolio Managers in the aforementioned
reporting formats is prescribed in Annexure 5B.
5.4.3. Portfolio Managers shall submit data as per the specified formats for all its
clients on quarterly basis within 10 days from end of the quarter. Day-wise
data shall be furnished for table headings: “Client Folio AUM”, “PM Pool
Demat Account Holding” and “Client Holding Master”.
Page 44 of 100
5.4.4. In their first time reporting, Portfolio Managers shall submit data for all their
clients from April 01, 2020 to September 30, 2023.
5.4.5. Details of the requirements prescribed under various clauses of this
Master Circular that are covered through the reporting formats, as
mentioned in the paragraph 5.4.1 above, are specified in Annexure 5C.
5.5. Reporting to clients by Portfolio Managers
5.5.1. Portfolio Managers shall furnish a report in the format provided at
Annexure 5D57 of this Master Circular, to their clients on a quarterly basis
58 which inter-alia includes the following59:
5.5.1.1. Details of investment of client’s funds in the securities of
associates/related parties of the Portfolio Manager.
5.5.1.2. Details of instances of passive breach of investment limits, if any, and
steps taken to rectify the same.
5.5.1.3. Details of credit ratings of investments in debt and hybrid securities.
57 Revised format as per SEBI circular SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2021/0000000679 dated December
10, 2021 to include details of Co-investment Portfolio Management services offered by Portfolio Manager
58 SEBI/HO/IMD/DF1/CIR/P/2020/26 dated February 13, 2020
59 SEBI Circular No. SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2022/112 dated August 26, 2022
Page 45 of 100
6. FEES AND CHARGES
6.1. Regulation of Fees and Charges
6.1.1. The inter se relationship between the portfolio manager and client, mutual
rights, liabilities and obligations relating to management of funds or
portfolio of securities are required to be specified in the agreement signed
between the portfolio manager and the client. The contents of the portfolio
manager-client agreement are laid out in the PM Regulations60.
6.1.2. In order to bring about greater uniformity, clarity and transparency with
regard to fees and charges, portfolio managers are advised to take the
following measures in respect of all client agreements:
6.1.3. Fees and Charges61 62
6.1.3.1. As provided in the PM Regulations63, no upfront fees shall be charged
by the Portfolio Managers, either directly or indirectly, to the clients64.
6.1.3.2. Brokerage at actuals shall be charged to clients as expense.
6.1.3.3. Operating expenses excluding brokerage, over and above the fees
charged for Portfolio Management Service, shall not exceed 0.50% per
annum of the client’s average daily AUM.
6.1.3.4. Charges for all transactions in a financial year (Broking, Demat,
custody etc.) through self or associates shall be capped at 20% by
value per associate (including self) per service. Any charges to
60 Regulation 22 read with Schedule IV of the SEBI (Portfolio Managers) Regulations, 2020
61 SEBI Cir. /IMD/DF/13/2010 dated October 5, 2010
62 SEBI/HO/IMD/DF1/CIR/P/2020/26 dated February 13, 2020
63 Regulation 22 (11) of the SEBI (Portfolio Managers) Regulations, 2020
64 SEBI/HO/IMD/DF1/CIR/P/2020/26 dated February 13, 2020
Page 46 of 100
self/associate shall not be at rates more than that paid to the non-
associates providing the same service.
6.1.3.5. The provisions with respect to fees and charges shall not be applicable
to Co-investment services65.
6.1.3.6. Profit/ performance shall be computed on the basis of high water mark
principle over the life of the investment, for charging of performance /
profit sharing fee.
High Water Mark Principle: High Water Mark shall be the highest
value that the portfolio/account has reached. Value of the portfolio for
computation of high watermark shall be taken to be the value on the
date when performance fees are charged. For the purpose of charging
performance fee, the frequency shall not be less than quarterly. The
portfolio manager shall charge performance based fee only on
increase in portfolio value in excess of the previously achieved high
water mark.
Illustration: Consider that frequency of charging of performance fees
is annual. A client’s initial contribution is ₹50,00,000, which then rises
to ₹60,00,000 in its first year; a performance fee/ profit sharing would
be payable on the ₹10,00,000 return. In the next year the portfolio
value drops to ₹55,00,000 hence no performance fee would be
payable. If in the third year the Portfolio rises to ₹65,00,000, a
performance fee/profit sharing would be payable only on the ₹5,00,000
profit which is portfolio value in excess of the previously achieved high
65 SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2021/0000000679 dated December 10, 2021
Page 47 of 100
water mark of ₹60,00,000, rather than on the full return during that year
from ₹55,00,000 to ₹65,00,000.
6.1.3.7. All fees and charges shall be levied on the actual amount of clients’
assets under management.
6.1.3.8. High Water Mark shall be applicable for discretionary and non-
discretionary services and not for advisory services.
6.1.3.9. In case of interim contributions/ withdrawals by clients, performance
fees may be charged after appropriately adjusting the high water mark
on proportionate basis.
6.1.4. Exit Load:66
6.1.4.1. In case client portfolio is redeemed in part or full, the exit load charged
shall be as under:
6.1.4.1.1. In the first year of investment, maximum of 3% of the amount
redeemed.
6.1.4.1.2. In the second year of investment, maximum of 2% of the amount
redeemed.
6.1.4.1.3. In the third year of investment, maximum of 1% of the amount
redeemed.
6.1.4.1.4. After a period of three years from the date of investment, no exit
load.
66 SEBI/HO/IMD/DF1/CIR/P/2020/26 dated February 13, 2020
Page 48 of 100
6.1.4.2. The provisions with respect to exit load as specified at paragraph
6.1.4.1 shall not be applicable to Co-investment services67.
6.1.5. In case of large value accredited investors, the quantum and manner of
exit load applicable to the client of the Portfolio Manager shall be governed
through bilaterally negotiated contractual terms and the provisions of
paragraph 6.1.4 of this Master Circular shall not be applicable68.
6.1.5.1. “Accredited Investor” shall have the same meaning as assigned to it
under clause (ab) of sub-regulation (1) of regulation 2 of the Securities
and Exchange Board of India (Alternative Investment Funds)
Regulations, 2012.
6.1.6. Maximum Liability69
6.1.6.1. The PM Regulations70 provide that the agreement between the
portfolio manager and the client shall, inter alia, contain, in case of a
discretionary portfolio manager, a condition that the liability of a client
shall not exceed his investment with the portfolio manager.
6.1.6.2. Portfolio managers shall strictly comply with the aforesaid Regulation.
67 SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2021/0000000679 dated December 10, 2021
68 SEBI/HO/IMD/IMD-I DOF1/P/CIR/2021/693 dated December 21, 2021
69 SEBI Cir. /IMD/DF/13/2010 dated October 5, 2010
70 Regulation 22(2)(m) of the SEBI (Portfolio Managers) Regulations, 2020
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7. GRIEVANCE REDRESSAL
7.1. Dispute Resolution71
7.1.1. The PM Regulations72 provide for settlement of grievances/disputes and
provision for arbitration in the portfolio manager – client agreement.
7.1.2. In case of any dispute regarding fees and charges, the same shall be
referred to arbitration for settlement as per the terms of the agreement,
under the Arbitration and Conciliation Act, 1996.
7.2. Disclosure of Investor Complaints by Portfolio Managers on their
websites73
7.2.1. In order to enhance transparency in the Investor Grievance Redressal
Mechanism, all Portfolio Managers on a monthly basis shall disclose on
their websites, the data pertaining to all complaints including SCORES
complaints received by them in the format mentioned in Annexure 7A of
this Master Circular. The information shall be made available by 07th of the
succeeding month.
7.2.2. Further, the Portfolio Managers are advised to display link/option on their
websites and mobile apps so as to enable their clients to lodge complaint
with them directly. Additionally, link to SEBI Complaints Redress System
(“SCORES”) website and the link to download the SCORES mobile app
may also be provided by the Portfolio Managers on their websites.
71 SEBI Cir. /IMD/DF/13/2010 dated October 5, 2010
72 Regulation 22 read with clause 18 of Schedule IV of the SEBI (Portfolio Managers) Regulations, 2020
73 SEBI/HO/IMD/IMD-II_DOF7/P/CIR/2021/681 dated December 10, 2021
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ANNEXURES
1 Annexure 1A: Online Processing of Portfolio Manager Applications
2 Annexure 2A: Guidelines for Advertisements by Registered Portfolio Managers
3 Annexure 2B: Code of Conduct for Distributors of Portfolio Management
Services
4 Annexure 3A: Format of obtaining the consent from the client
5 Annexure 4A: Illustration Annexure on Fees and Charges
6 Annexure 4B: Format of Investor Charter in Respect of Portfolio Management
Services
7 Annexure 4C: Format for disclosure of Performance of the Portfolio Manager
8 Annexure 5A: Format for Monthly Report to SEBI
9 Annexure 5B: Offsite Inspection Reporting Formats for Portfolio Managers
10 Annexure 5C:Details of reporting requirements as per the provisions of the
Master Circular
11 Annexure 5D: Format of Quarterly Reporting to Client
12 Annexure 7A: Format of Complaint Data to be displayed by Portfolio Managers
13 Annexure Z: List of Circulars Rescinded
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Annexure 1A: Online Processing of Portfolio Manager Applications
Online Process for Fresh Registration
a. Log-in ID and Password will be generated on receipt of a fresh application
for registration as a Portfolio Manager.
b. The URL of the SEBI portal, the Log-in ID and Password will be e-mailed to
the Compliance Officer or the Principal Officer only.
c. On receipt of the Log-in ID and Password the applicant should fill up all the
details by clicking “Fresh Registration” under the tab “Portfolio Manager”
given on the SEBI Intermediary Portal (“SI Portal”).
d. All instructions on how to fill the details under every tab should be read before
filling the online form. The same can be accessed by clicking the “Blue
Question Mark” on the top right hand corner of every page.
e. The details filled under every tab should be saved by clicking on the “Saved
Draft” button as soon as a particular tab is completely filled up.
f. Once all the details are filled up, the applicant should submit the online
application form by clicking the “Final Submit” button.
g. After SEBI approval, the applicant will be required to fill the fee details. The
same will be sent through a mail which can be accessed by clicking the link
“My Worklist” on the home page of SEBI Intermediary Portal.
h. Inside the mail, there will be a link “Enter Fee Details” through which the
applicant has to enter the fee details and save it.
i. Once the details relating to fees are entered and saved, it must be adjusted
against the outstanding amount as per the instructions given in the “blue
question mark” on the top right hand corner of the page.
j. Once the fees are adjusted, the fee details must be saved and then
submitted, by clicking the “Submit” button in the e-mail, to SEBI for final
approval.
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Online Process for Updation of Information
a. There can be any change in information that a registered Portfolio Managers
can undergo during its operations.
b. Apart from sending the physical copy of such changes in information to SEBI,
the same should be updated on the SEBI Intermediary Portal.
c. It can be done by clicking “Updation of Registration” under the tab “Portfolio
Manager” given on the SEBI Intermediary Portal.
d. All instructions to fill the details under every tab can be accessed by clicking
the “Blue Question Mark” on the top right hand corner of every page.
e. The details changed under every tab should be saved by clicking on the
“Saved Draft” button.
f. Once the changed details are updated, the applicant should submit the
updation form by clicking the “Final Submit” button.
g. On receipt of the updation form, the online updation shall be approved by
SEBI.
Page 53 of 100
Annexure 2A: Guidelines for Advertisements by Registered Portfolio
Managers
For the purpose of these guidelines, the expression “advertisement” means notices,
brochures, pamphlets, circulars, showcards, catalogues, hoardings, placards,
posters, insertions in newspapers, pictures, films, radio / television programmes or
through any electronic media”.
1. CODE OF ADVERTISEMENT
1.1. An advertisement shall be truthful, fair and clear and shall not contain any
statement, promise or forecast which is untrue or misleading.
1.2. An advertisement shall be considered to be misleading if it contains –
(i) Statements made about the performance or activities of the Portfolio
Manager in the absence of necessary explanatory or qualifying
statements, which may give an exaggerated picture of the performance
or activities of the Portfolio Manager, than what it really is.
(ii) An inaccurate portrayal of the past performance or portrayal in a manner
which implies that past gains or income will be repeated in future.
1.3. The advertisement shall not be so designed in content and format or in print
as to be likely to be misunderstood, or likely to disguise the significance of
any statement. Advertisement shall not contain statements which directly or
by implication or by omission mislead the investor.
1.4. The publicity literature should contain only information, the details of which
are contained in the Portfolio Managers scheme particulars.
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1.5. As the investors may not be sophisticated in legal or financial matters, care
should be taken that the advertisement is set forth in a clear, concise and
understandable manner. Extensive use of technical or legal terminology or
complex language and the inclusion of excessive details which may detract
the investors should be avoided.
1.6. The advertisement shall not contain information, the accuracy of which is to
any extent dependent on assumptions.
1.7. The advertisement shall not contain any promise or guarantee of
assured/fixed return to the investors, either directly or indirectly.
1.8. The advertisement shall not compare one Portfolio Manager with another,
implicitly or explicitly, unless the comparison is fair and all information
relevant to the comparison is included in the advertisement.
2. OBSERVANCE OF CODE OF ADVERTISEMENT
2.1. Every Portfolio Manager shall strictly observe the Code of Advertisement set
out in paragraph 1 given above. Any breach of the Code would be construed
as breach of Code of conduct set out in Schedule III to the Securities and
Exchange Board of India (Portfolio Managers) Regulations, 2020.
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Annexure 2B: Code of Conduct for Distributors of Portfolio Management
Services
1. The Code of Conduct, as provided hereunder, shall be applicable to all persons
involved in the distribution of Portfolio Management Services.
2. All distributors shall:
i. Adhere to the Securities and Exchange Board of India (Portfolio Managers)
Regulations, 2020 and circulars issued from time to time related to
distributors, distribution, advertising practices of Portfolio Management
Services, etc.
ii. Maintain high standards of integrity, promptitude and fairness in the conduct
of all their business.
iii. Act with due skill, care and diligence in the conduct of all their business.
iv. Consider investor's interest, risk profiling and suitability to their financial
needs while marketing Portfolio Management Services.
v. Take necessary steps to ensure that the clients’ interest is protected.
vi. Ensure that commission or incentive shall never form the basis for
recommending Portfolio Management Services.
vii. Be fully conversant with the Disclosure Document, Investment Approaches,
fees and charges and the terms of agreement to be entered between the
client and the Portfolio Manager.
viii. Disclose to the clients all material information including the details of
distribution commissions for various Investment Approaches.
ix. Assist clients in completing Know Your Client (“KYC”) and In-Person
Verification related procedures.
x. Provide full and latest information about investment approaches and also
highlight the assumptions made in performance calculations, risk
assessments, performance projections etc., if any, for such investment
approaches.
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xi. Inform the clients about the risks and level of control over the administration
of Portfolio associated with the type of Portfolio Management Services
offered (i.e. Discretionary, Non-discretionary or Advisory).
xii. Abstain from assuring returns in any type of Investment Approach and from
any kind of mis-representation.
xiii. Abstain from attracting clients through unethical means such as offer of
rebate/gifts etc.
xiv. Maintain necessary infrastructure to provide support to clients in timely
receipt of disclosure document, statement of portfolio and performance,
statement of fees, audit report, etc.
xv. Maintain confidentiality of clients’ details, deals and transactions, which they
come to know in their business relationship.
xvi. Abstain from making negative statements about other Portfolio Managers or
Investment Approaches. Make comparisons, if any, only with the similar and
comparable products along with complete facts.
xvii. Not indulge in any manipulative, fraudulent or deceptive practices or spread
rumours with a view to make personal gain.
xviii. Hold valid Certification, as specified by SEBI, at all times.
****
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Annexure 3A: Format of obtaining the consent from the client
1. This document is for obtaining the consent/dissent for investment by Portfolio
Manager in its associates/related parties.
2. As per SEBI (Portfolio Managers) Regulations, 2020, the limits applicable for
investment in the securities of associates/related parties of Portfolio Manager
are as under:
Security Limit for investment in single Limit for investment across
associate/related party (as multiple associates/related
percentage of client’s AUM) parties (as percentage of
client’s AUM)
Equity 15% 25%
Debt and hybrid securities 15% 25%
Equity + Debt + Hybrid 30%
securities
3. The client may choose not to invest in the securities of associates/related
parties of the Portfolio Manager. Further, the client may choose a limit lower
than the limits prescribed at paragraph 2 above.
4. The risks and conflict of interest associated with investment by the Portfolio
Manager in the securities of its associates/related parties are as under:
Risks:
Conflict of Interest:
5. In case the client wants the Portfolio Manager to invest in the securities issued
by associated/related parties of Portfolio Manager and provides the consent for
the same, the investments shall be subject to the following limits:
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Security Limit for investment in Limit for investment across
single associate/related multiple associates/related
party (as percentage of parties (as percentage of
client’s AUM) client’s AUM)
Equity
Debt and hybrid securities
Equity + Debt + Hybrid
securities
6. In case of passive breach of investment limits (i.e., occurrence of instances not
arising out of omission and/or commission of Portfolio Manager) as decided at
paragraph 5 above, a rebalancing of the portfolio is required to be completed
by Portfolio Managers within a period of 90 days from the date of such breach.
However, the client may give an informed, prior positive consent to the Portfolio
Manager for a waiver from the requirement of rebalancing of the portfolio to
rectify the passive breach of investment limits. The client may choose not to
provide any waiver.
7. Please indicate consent or dissent as under:
Limits on investment
Consent: Portfolio Manager can invest in the securities of its
associates/related parties within the limits agreed upon at paragraph 5 above.
Dissent: Portfolio Manager cannot invest in the securities of its
associates/related parties.
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Waiver from rebalancing of portfolio on passive breach of investment limits
Consent: Portfolio Manager need not rebalance the portfolio on passive
breach of investment limits.
Dissent: Portfolio Manager should rebalance the portfolio on passive breach
of investment limits.
Signature of the client
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Annexure 4A: Illustration for Annexure on Fees and Charges74
This computation is for illustrative purpose only. Portfolio Managers may suitably
modify this to reflect their fees and charges.
The assumptions for the illustration are as follows:
a. Size of sample portfolio: ₹50 lacs75 over
b. Period: 1 year
c. Hurdle Rate: 10% of amount invested
d. Brokerage/ DP charges/ transaction charges: Weighted Average of such
charges (as a percentage of assets under management) levied in the past
year/ in case of new portfolio managers indicative charges as a percentage
of assets under management (e.g. 2%)
e. Management fee (e.g. 2%)
f. Performance fee (e.g. 20% of profits over hurdle rate)
g. The frequency of calculating all fees is annual.
Portfolio performance: Gain of 20%
Nature of Fees Amount in ₹ Amount in ₹
Capital Contribution 50,00,00076
Less: Any other fees (please enumerate) XX
Assets under Management 50,00,000
Add: Profits on investment during the year @
20% on assets under management 10,00,000
Gross value of the portfolio at the end of the 60,00,000
year
Less: Brokerage/DP charges/any other 1,00,000
similar charges (e.g. 2% of ₹50,00,000)
Less: Management Fees (if any) (e.g. 2% of 1,00,000
₹50,00,000)
Less: Performance fees (if any) (e.g 20% of 1,00,000
₹5,00,000 – working given below) XX
Less: Any other fees (please enumerate)
3,00,000
Total charges during the year
74 SEBI Cir. /IMD/DF/13/2010 dated October 5, 2010
75 Clause 3 (v) of SEBI/HO/IMD/DF1/CIR/P/2020/26 dated February 13, 2020
76 Illustration has been suitably updated to consider minimum investment amount of ₹50 lakh.
Page 61 of 100
Net value of the portfolio at the end of the 57,00,000
year
% change over capital contributed 14.00%
Calculation of Performance Fees for above
Serial Nature of Fees Amount in ₹
A Profit for the year 10,00,000
B Less: Minimum profit level (Hurdle Rate @10% on 5,00,000
₹50,00,000)
C Amount on which Profit Sharing Fees to be 5,00,000
calculated (B-A)
D Performance Fees (@20% of C) 1,00,000
Portfolio performance: Loss of 20%
Nature of Fees Amount in ₹ Amount in ₹
Capital Contribution 50,00,000
Less: Any other fees (please enumerate) XX
Assets under Management 50,00,000
Less: Loss on investment during the year @
20% on assets under management 10,00,000
Gross value of the portfolio at the end of the 40,00,000
year
Less: Brokerage/DP charges/any other 1,00,000
similar charges (e.g. 2% of ₹50,00,000)
Less: Management Fees (if any) (e.g. 2% of 1,00,000
₹50,00,000) XX
Less: Performance fees (if any) XX
Less: Any other fees (please enumerate)
2,00,000
Total charges during the year
Net value of the portfolio at the end of the 38,00,000
year
% change over capital contributed (24.00%)
Charges on Portfolio performance: No change
Nature of Fees Amount in ₹ Amount in ₹
Capital Contribution 50,00,000
Less: Any other fees (please enumerate) XX
Assets under Management 50,00,000
Add: Profits/Losses on investment during the
year @ 0% on assets under management 0
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Gross value of the portfolio at the end of the 50,00,000
year
Less: Brokerage/DP charges/any other 1,00,000
similar charges (e.g. 2% of ₹50,00,000)
Less: Management Fees (if any) (e.g. 2% of 1,00,000
₹50,00,000) 0
Less: Performance fees (if any) XX
Less: Any other fees (please enumerate)
2,00,000
Total charges during the year
Net value of the portfolio at the end of the 48,00,000
year
% change over capital contributed (4.00%)
Note: The frequency of charging various fees may be specified for every type
of fees in the illustration
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Annexure 4B: Format of Investor Charter in Respect of Portfolio
Management Services
A. Vision and Mission Statements for investors.
Vision:
To implement diligently researched customised investment strategies which
help investors meet their long-term financial goals in a risk appropriate manner.
Mission:
To ensure that the Portfolio Management Services industry provides a viable
investment avenue for wealth creation by adopting high levels of skill, integrity,
transparency and accountability.
B. Details of business transacted by the organization with respect to the
investors.
a. appropriate risk profiling of investors
b. to provide Disclosure Document to investors
c. executing the PMS agreement
d. Making investment decisions on behalf of investors (discretionary) or
investment decisions taken at the discretion of the Investor (non-
discretionary) or advising investors regarding their investment decisions
(advisory), as the case may be.
C. Details of services provided to investors and estimated timelines:-
i. Discretionary & Non-Discretionary Portfolio Management Services (PMS):-
Under these services, all an investor has to do, is to give his portfolio in any
form i.e. in stocks or cash or a combination of both. The minimum size of the
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portfolio under the Discretionary and/ or Non-Discretionary Funds
Management Service should be Rs.50 lakhs as per the current SEBI
Regulations. However, the PMS provider reserves the right to prescribe a
higher threshold product-wise or in any other manner at its sole discretion.
The PMS provider will ascertain the investor’s investment objectives to
achieve optimal returns based on his risk profile. Under the Discretionary
Portfolio Management service, investment decisions are at the sole
discretion of the PMS provider if they are in sync with the investor’s
investment objectives. Under the Non-Discretionary Portfolio Management
service, investment decisions taken at the discretion of the Investor.
ii. Investment Advisory Services: -
Under these services, the Client is advised on buy/sell decision within the
overall profile without any back-office responsibility for trade execution,
custody of securities or accounting functions. The PMS provider shall be
solely acting as an Advisor to the Client and shall not be responsible for the
investment/divestment of securities and/or administrative activities on the
client’s portfolio. The PMS provider shall act in a fiduciary capacity towards
its Client and shall maintain arm’s length relationship with its other activities.
The PMS provider shall provide advisory services in accordance with
guidelines and/or directives issued by the regulatory authorities and/or the
Client from time to time in this regard.
iii. Client On-boarding
a. Ensuring compliance with KYC and AML guidelines.
b. franking & signing the Power of Attorney to make investment decisions
on behalf of the investor.
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c. opening demat account and funding of the same from the investor’s
verified bank account and/or transfer of securities from verified demat
account of the investor and
d. Mapping the said demat account with Custodian.
iv. Ongoing activities
a. To provide periodic statements to investors as provided under the PM
Regulations 2020 and other SEBI notifications and circulars (“PM
Regulations”) and
b. Providing each client an audited account statement on an annual basis
which includes all the details as required under the PM Regulations.
v. Fees and Expenses
Charging and disclosure of appropriate fees & expenses in accordance with
the PM Regulations.
vi. Closure and Termination
Upon termination of PMS Agreement by either party, the securities and the
funds lying in the account of the investor shall be transferred to the verified
bank account/ demat account of the investor.
vii. Grievance Redressal
Addressing in a time bound manner investor’s queries, service requests
and grievances, if any, on an ongoing basis.
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Timelines of the services provided to investors are as follows:
Sr. No. Service / Activity Timeline
1 Opening of PMS account 7 days from receipt of all requisite documents
(including demat account) for from the client, subject to review of the
residents. documents for accuracy and completeness by
portfolio manager and allied third party service
providers as may be applicable.
2 Opening of PMS account 14 days from receipt of all requisite documents
(including demat account) for from the client, subject to review of the
non-individual clients. documents for accuracy and completeness by
portfolio manager and allied third party service
providers as may be applicable.
3 Opening of PMS account 14 days from receipt of all requisite documents
(including demat account, bank from the client, subject to review of the
account and trading account) documents for accuracy and completeness by
for non-resident clients. portfolio manager and allied third party service
providers as may be applicable.
4 Registration of nominee in Registration of nominee should happen along
PMS account and demat with account opening, therefore turnaround
account. time should be same as account opening
turnaround time.
5 Modification of nominee in 10 days from receipt of requisite nominee
PMS account and demat modification form, subject to review of the
account. documents for accuracy and completeness by
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Sr. No. Service / Activity Timeline
portfolio manager and allied third party service
providers as may be applicable.
6 Uploading of PMS account in 10 days from date of account opening
KRA and CKYC database. (Portfolio Manager may rely on the custodian
for updating the same).
7 Whether portfolio manager is At the time of client signing the agreement; this
registered with SEBI, then information should be a part of the account
SEBI registration number. opening form and disclosure document.
8 Disclosure about latest Disclosure of portfolio manager's total AUM -
networth of portfolio manager monthly to SEBI
and total AUM. Disclosure of latest networth should be done in
the disclosure document whenever there are
any material changes.
9 Intimation of type of PMS At the time of client signing the agreement;
account – discretionary. this information should be a part of the
account opening form.
10 Intimation of type of PMS At the time of client signing the agreement;
account - non discretionary. this information should be a part of the
account opening form.
11 Intimation to client what At the time of client signing the agreement;
discretionary account entails this information should be a part of the
and powers that can be account opening form.
exercised by portfolio
manager.
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Sr. No. Service / Activity Timeline
12 Intimation to client what At the time of client signing the agreement;
nondiscretionary account this information should be a part of the
entails and powers that can be account opening form.
exercised by portfolio
manager.
13 Copy of executed PMS Within 3 days of client request.
agreement sent to client.
14 Frequency of disclosures of All details regarding client portfolios should be
available eligible funds. shared quarterly (point 26).
15 Issuance of funds and This data should be shared on a quarterly
securities balance statements basis or upon client request.
held by client.
16 Intimation of name and demat Within 3 days of PMS and demat account
account number of custodian opening.
for PMS account.
17 Conditions of termination of At the time of client signing the agreement;
contract. this information should be a part of the
account opening form.
18 Intimation regarding PMS fees At the time of client signing the agreement;
and modes of payment or this information should be a part of the
frequency of deduction. account opening form.
Page 69 of 100
Sr. No. Service / Activity Timeline
19 POA taken copy providing to Within 3 days of client request.
client.
20 Intimation to client about what At the time of client signing the agreement;
all transactions can portfolio this information should be a part of the
manager do using PoA. account opening form.
21 Frequency of providing Annual.
audited reports to clients
22 Explanation of risks involved in At the time of client signing the agreement;
investment. this information should be a part of the
account opening form.
23 Intimation of tenure of portfolio Indicative tenure should be disclosed at the
investments. time of client signing the agreement; this
information should be a part of the account
opening form.
24 Intimation clearly providing Negative list of securities should be taken from
restrictions imposed by the the client at the time of client signing the
investor on portfolio manager. agreement; this information should be a part of
the account opening form.
25 Intimation regarding settling of Settlement of funds and securities is done by
client funds and securities. the Custodian. The details of clients’ funds
and securities should be sent to the clients in
the prescribed format not later than on a
quarterly basis.
Page 70 of 100
Sr. No. Service / Activity Timeline
26 Frequency of intimation of Not later than on a quarterly basis or upon
transactions undertaken in clients' request.
portfolio account.
27 Intimation regarding conflict of The portfolio manager should provide details
interest in any transaction. of related party transactions and conflict of
interest in the Disclosure Document which
should be available on website of portfolio
manager at all times.
28 Timeline for providing The latest disclosure document should be
disclosure document to provided to investors prior to account opening
investor. and the latest disclosure documents should be
available on website of portfolio manager at all
times.
29 Intimation to investor about Within 3 days of PMS and demat account
details of bank accounts where
client funds are kept.
30 Redressal of investor Within 30 days, subject to all the information
grievances. required to redress the complaint is provided
by the complainant to the portfolio manager
Notes:
1. The number of days in the above timelines indicate clear working days
Page 71 of 100
D. Details of grievance redressal mechanism and how to access it
a. It is mandatory for every PMS provider to register itself on SEBI SCORES
(SEBI Complaint Redress System). SCORES is a centralised online
complaint resolution system through which the complainant can take up his
grievance against the PMS provider and subsequently view its status.
(https://scores.gov.in/scores/Welcome.html )
b. The details such as the name, address and telephone number of the investor
relations officer of the PMS provider who attends to the investor queries and
complaint should be provided in the PMS Disclosure document.
c. The grievance redressal and dispute mechanism should be mentioned in the
Disclosure Document.
d. Investors can approach SEBI for redressal of their complaints. On receipt of
complaints, SEBI takes up the matter with the concerned PMS provider and
follows up with them.
e. Investors may send their complaints to: Office of Investor Assistance and
Education, Securities and Exchange Board of India, SEBI Bhavan. Plot No.
C4-A, ‘G’ Block, Bandra-Kurla Complex, Bandra (E), Mumbai - 400 051.
E. Expectations from the investors (Responsibilities of investors)
1. Check registration status of the intermediary from SEBI website before
availing services.
2. Submission of KYC documents and application form in a timely manner with
signatures in appropriate places and with requisite supporting documents.
3. Read carefully terms and conditions of the agreement before signing the
same.
Page 72 of 100
4. Thorough study of the Disclosure Documents of the PMS to accurately
understand the risks entailed by the said investment in PMS.
5. Accurate and sincere answers given to the questions asked in the ‘Risk
Questionnaire’ shall help the PMS provider properly assess the risk profile of
the investor.
6. Thorough study of the quarterly statements sent by the PMS provider to the
investor intimating him about the portfolio’s absolute and relative performance,
its constituents and its risk profile.
7. Ensure providing complete details of negative list of securities as part of
freeze instructions at the time of entering into PMS agreement and every time
thereafter for changes, if any, in a timely manner.
8. To update the PMS provider in case of any change in the KYC documents
and personal details and to provide the updated KYC along with the required
proof.
Page 73 of 100
Annexure 4C: Format for disclosure of Performance of the Portfolio Manager
(As per Regulation 22 (4) (e) of SEBI (Portfolio Managers) Regulations, 2020)
Page 74 of 100
Annexure 5A: Format for Monthly Report to SEBI
Report for the month of ________ FY _____
Type of Services Offered
Sl. No. Type of Service Offered Whether the service is offered
1 Discretionary Service Yes/No
2 Non-Discretionary Service Yes/No
3 Advisory Service Yes/No
4 Co-investment Service Yes/No
I. Data for Discretionary Services
A. Break-up of clients of the Portfolio Manager
Domestic Clients Foreign Clients
PF/ EPFO Corporates Non- Non FPI Others Total
Corporates Residents
Particulars
No. of unique Clients as on
last day of the month
Assets under Management
(AUM) as on last day of the
month
B. Break-up of assets under management of the Portfolio Manager
Investment Assets Under Management as on last day of the month (in INR crores)
Approach Equity Plain Debt Structured Debt Derivatives Mutual Others Total
Listed Unlisted Listed Unlisted Listed Unlisted Equity Commodity Others Funds
Approach 1
Approach 2
---
Approach
‘N’
Total
C. Funds Inflow/ Outflow
Investment Funds Inflow/Outflow in the Approach During the Funds Inflow/Outflow in the Approach During the FY
Approach Month
Inflow during Outflow Net Inflow Inflow during the Outflow during Net Inflow (+ve)/
the month during the (+ve)/ Outflow FY since April 01 the FY since April Outflow (-ve)
(in INR crores) month to ____ 01 to ____
Page 75 of 100
(in INR crores) (-ve) during the (in INR crores) (in INR crores) during the FY since
month April 01 to ____
(in INR crores) (in INR crores)
Approach 1
Approach 2
---
Approach
‘N’
Total
D. Transaction Data
Sl. No. Particulars Figures
1 Sales in the month (in INR crores )
2 Purchases in the month (in INR crores )
3 Portfolio Turnover Ratio = (Higher of Purchases or Sales in the month
/Average AUM)
Note: Average AUM to be computed based on daily average
E. Performance Data
Returns (%) Portfolio Turnover Ratio
Investment Approach AUM (in INR Cr) 1 month 1 year 1 month 1 year
Investment Approach 1
Benchmark 1
Investment Approach 2
Benchmark 2
Investment Approach ‘N’
Benchmark ‘N’
Total
II. Data for Non- Discretionary Services
F. Break-up of clients of the Portfolio Manager
Domestic Clients Foreign Clients
PF/ Corporates Non- Non FPI Others Total
EPFO Corporates Residents
Particulars
No. of unique Clients
as on last day of the
month
Page 76 of 100
Assets under
Management
(AUM) as on last
day of the month
G. Break-up of assets under management of the Portfolio Manager
Assets Under Management as on last day of the month (in INR crores)
Equity Plain Debt Structured Debt Derivatives Mutual Others Total
Funds
Listed Unlisted Listed Unlisted Listed Unlisted Equity Commodity Others
H. Funds Inflow/ Outflow
Funds Inflow/Outflow During the Month Funds Inflow/Outflow During the FY
Inflow during Outflow during Net Inflow (+ve)/ Inflow during the FY Outflow during the FY Net Inflow (+ve)/
the month the month Outflow (-ve) since April 01 to ____ since April 01 to ____ Outflow (-ve) during the
(in INR crores) (in INR crores) during the month (in INR crores) (in INR crores) FY since April 01 to ____
(in INR crores) (in INR crores)
I. Transaction Data
Sl. No. Particulars Figures
1 Sales in the month (in INR crores )
2 Purchases in the month (in INR crores )
3 Portfolio Turnover Ratio = (Higher of Purchases or Sales in the month
/Average AUM)
Note: Average AUM to be computed based on daily average
J. Performance Data
Returns (%) Portfolio Turnover Ratio
AUM (in INR Cr)
1 month 1 year 1 month 1 year
Page 77 of 100
III. Data for Advisory Services
K. Break-up of client base of the Portfolio Manager
Domestic Clients Foreign Clients
PF/ Corporates Non-Corporates Non FPI Others Total
Type of Client EPFO Residents
No. of unique Clients as on last
day of the month
Value of the Assets for which
Advisory Services are being
given (Amount in INR crores)
IV. Data for Co-investment Services
L. Break-up of clients of the Portfolio Manager
Domestic Clients Foreign Clients
Corporates Non- Corporates Non Others
Total Clients
Type of Client Corporates Residents
No. of unique Clients as
on last day of the month
Value of the Assets for
which Co-investment
Services are being
given (Amount in INR
crores)
M. Break-up of assets under management of the Portfolio Manager
Funds Funds Assets Under Management as on last day of the month (in INR crores)
In- Out- Equity Plain Debt Structured Debt Others Total
flow flow
in the in the
month month
Note: AUM may be calculated on cost basis or in any manner as may be specified by SEBI
Page 78 of 100
V. Data on Complaints
Type of Client Total No. of complaints
Pending at the Received during Resolved during the Pending at the end of
beginning of the month month the month
the month
Domestic - PF/
EPFO
Domestic
Corporates
Domestic Non-
Corporates
Foreign – NR
Foreign – FPI
Foreign -Others
Total
Note: Data on investor complaints registered through SCORES or which are directly received by Portfolio Manager
to be provided
Page 79 of 100
Annexure 5B: Offsite Inspection Reporting Formats
Table 1: PM_MASTER:
PM_MASTER
SN Field Name Type Remarks
1 REPORTING DATE Date Date for which the details are provided in
DDMMYYYY
2 PM_SEBI_REG_NO VARCHAR2(20) SEBI Registration Number of Portfolio Manager
3 PM_NAME VARCHAR2(100) Name of Portfolio Manager
4 PM_PAN VARCHAR2(10) PAN of Portfolio Manager
5 PM_PO_PAN VARCHAR2(10) PAN of Principle Officer
6 PM_PO_NAME VARCHAR2(100) Name of Principal Officer
7 PM_CO_PAN VARCHAR2(10) PAN of Compliance Officer
8 PM_CO_NAME VARCHAR2(100) Name of Compliance Officer
9 NET WORTH VARCHAR2(24,4) Net worth of PM as on March 31 of previous year
10 PO_NISM VARCHAR2(20) Principal Office NISM Certificate Number
11 FIU_REG_NO VARCHAR2(20) FIU Reg Number
12 KRA_REG_NO VARCHAR2(20) Institution code issued by KRA. In case of regiatration
with multiple KRA agencies, provide any one KRA
agency registration number
13 CERSAI_REG_NO VARCHAR2(20) Institution code issued by CERSAI
14 SCORE_REG_NO VARCHAR2(20) SEBI SCORE registration number
15 WEBLINK_DIRECT VARCHAR2(100) Web site link for Direct On-boarding of client
16 FO_SYSTEM_NAME VARCHAR2(100) Name of Front Office Trading System
17 BO_SYSTEM_NAME VARCHAR2(100) Name of Back Office Accounting System or Fund
accountant
18 POOL_DP_ID * VARCHAR2(20) Pool DP ID
19 POOL_DP_NAME * VARCHAR2(50) Pool Name of DP
20 POOL_NAME* VARCHAR2(50) Pool Account title
21 POOL_BOID * VARCHAR2(20) Pool BOID
*PMS may have multiple pool demat accounts
Page 80 of 100
Table 2: CLIENT_MASTER:
CLIENT_MASTER
SN Field Name Type Remarks
1 REPORTING DATE Date Date for which the details are provided in
DDMMYYYY
2 PM_SEBI_REG_N VARCHAR2(20) SEBI Registration Number of Portfolio Manager
O
3 CLIENT_PAN VARCHAR2(10) PAN of each client
4 CLIENT_CATEGO VARCHAR2(30) Individual_Resident
RY Individual_Non Resident
HUF
Corporate_Resident
Corpoarte_Non reisdent
Assocation of Persons
Body Of Individuals
Partnership Firm
Limited Liablity Partnership
Trust
FPI
Others
5 CLIENT_SUB_CAT VARCHAR2(30) General, Accredited, Large value accredited, Co-
EGORY investment#
6 CLIENT_FIRST_NA VARCHAR2(150) Client First Name
ME
7 CLIENT_MIDDLE_ VARCHAR2(35) Client Middle Name
NAME
8 CLIENT_LAST_NA VARCHAR2(35) Client Last Name
ME
9 ADDRESS1 VARCHAR2(120) Address 1
10 ADDRESS2 VARCHAR2(120) Address 2
11 ADDRESS3 VARCHAR2(120) Address 3
12 ADDRESS4 VARCHAR2(120) Address 4
13 CITY VARCHAR2(100) City
14 STATE VARCHAR2(35) State Name
15 PINCODE VARCHAR2(6) PIN Code
16 COUNTRY VARCHAR2(35) Country Name
17 MOBILE_NO VARCHAR2(40) Primary Mobile No
18 EMAIL VARCHAR2(500) Email Id
19 JH1 VARCHAR2(150) Second Holder name (Joint holder 1)
20 JH2 VARCHAR2(150) Third Holder name (Joint Holder 2)
Page 81 of 100
21 JH1_PAN_NO VARCHAR2(10) Joint Holder 1 PAN
22 JH2_PAN_NO VARCHAR2(10) Joint Holder 2 PAN
23 NOMINEE1_PAN_ VARCHAR2(10) Noimnee 1 PAN. NA if not applicable
NO
24 NOMINEE1_NAME VARCHAR2(100) Nominee 1 Name. NA if not applicable
25 NOMINEE2_PAN_ VARCHAR2(10) Noimnee 2 PAN. NA if not applicable
NO
26 NOMINEE2_NAME VARCHAR2(100) Nominee 2 Name. NA if not applicable
27 NOMINEE3_PAN_ VARCHAR2(10) Noimnee 3 PAN. NA if not applicable
NO
28 NOMINEE3_NAME VARCHAR2(100) Nominee 4 Name. NA if not applicable
29 HOLDING_NATUR VARCHAR2(35) SINGLE
E ANYONE OR SURVIOR
JOINT
FIRST OR SURVIOR
NOT APPLICABLE (FOR NON INDIVIDUALS)
30 GENDER VARCHAR2(10) Gender of First holder-
MALE
FEMALE
NA
OTHERS
31 DOB DATE Date of Birth in YYYY-MM-DD format of First holder
For non-individuals, date of incorporation will be
captured wherever available
32 NATIONALITY VARCHAR2(40) Nationality of First holder
33 OCCUPATION VARCHAR2(100) Occupation of First Holder
34 DATE OF PMS DATE PMS Account Activation date
ACCOUNT
ACTIVATION
#Clients other than Accredited, Large value accredited, Co-investment shall be categorised as 'General'
under' the category 'CLIENT_SUB_CATEGORY'
Table 3: CLIENT_FOLIO_MASTER:
CLIENT_FOLIO_MASTER
SN Field Name Type Remarks
1 DATE OF AGREEMENT Date Date of agreement
2 PM_SEBI_REG_NO VARCHAR2(20) SEBI Registration Number of Portfolio
Manager
3 CLIENT_PAN VARCHAR2(10) PAN of client
4 FOLIO_NUMBER VARCHAR2(20) Folio no. of the client
Page 82 of 100
5 CATEGORY OF SERVICE VARCHAR2(20) Discretionary
Non Discretionary
Advisory
6 INVESTMENT_APPROACH VARCHAR2(50) Name of Investment Approach
7 INVESTMENT_STRATEGY VARCHAR2(50) EQUITY, DEBT, HYBRID, MULTI
8 BENCHMARK VARCHAR2(50) BENCHMARK INDEX selected by PM
for the strategy
9 CONSENT_ASSOCIATES VARCHAR2(10) Whether client has given permission
for investments in associates/related
parties (Y/N)
10 CONSENT % INDIVIDUAL_EQUITY NUMERIC(2,2) Percent of AUM which can be invested
by PM in the equity shares of one
associate/related party
11 CONSENT % TOTAL_EQUITY NUMERIC(2,2) Percent of AUM which can be invested
by PM in the equity shares of all its
associate/related party
12 CONSENT % INDIVIDUAL_DEBT NUMERIC(2,2) Percent of AUM which can be invested
by PM in the debt and hybrid
securities of one associate/related
party
13 CONSENT % TOTAL_DEBT NUMERIC(2,2) Percent of AUM which can be invested
by PM in the debt and hybrid
securities of all its associate/related
party
14 CONSENT % TOTAL_LIMIT NUMERIC(2,2) Percent of AUM which can be invested
by PM in the equity, debt and hybrid
securities of all its associate/related
party
15 CONSENT_EQUITY_DERIVATIVES VARCHAR2(10) Consent for investment in Equity
Derivatives (Y/N)
16 CONSENT_COM_DERIVATIVES VARCHAR2(10) Consent for investment in Commodity
Derivatives (Y/N)
17 CONSENT_DERIVATIVE_PER NUMERIC(2,2) Percent of AUM which can be invested
in derivatives
18 CLIENT_BOID VARCHAR2(20) BOID of the client
19 CUST_REG_NO VARCHAR2(20) SEBI Registration Number of
Custodian
20 CUST_NAME VARCHAR2(100) Name of Custodian
21 CUSTODY_CODE VARCHAR2(20) Custodian code of the client
22 CLIENT_POA VARCHAR2(50) Yes or No for Power of Attorney
executed in favour of PM
23 PM_DISTRIBUTOR_NAME VARCHAR2(50) Name of the Distributor
24 PM_DISTRIBUTOR_PAN VARCHAR2(10) PAN of the Distributor
25 PERFORMANCE_FEES_PER NUMERIC(2,2) Performance fees to be charged (in %)
Page 83 of 100
Table 4: CLIENT_FOLIO_MASTER
CLIENT_FOLIO_AUM
SN Field Name Type Remarks
1 AUM_DATE Date Date of AUM
2 PM_SEBI_REG_NO VARCHAR2(20) SEBI Registration Number of Portfolio Manager
3 CLIENT_PAN VARCHAR2(10) PAN of client
4 CLIENT_FOLIO_NO VARCHAR2(20) folio no. of the client for which aum is provided
5 CLIENT_FOLIO_UNITS* Numeric (24,4) No. of units under the folio
6 CLIENT_FOLIO_AUM Numeric (24,4) AUM of the folio
*If exit load is charged, number of units to be provided and number of units should not be kept blank
Table 5: CLIENT_CAP_TRANSACTIONS
CLIENT_CAP_TRANSACTIONS
SN Field Name Type Remarks
1 PM_SEBI_REG_NO VARCHAR2(20) SEBI Registration Number of Portfolio Manager
2 CLIENT_FOLIO VARCHAR2(20) Folio Number of the Investor
3 TRN_TYPE VARCHAR2(20) Initial Inflow/Top up/Partial Redemption/Full
redemption
4 TRAN_DATE Date Date on which transaction processed in
DDMMYYYY
5 TRAN_AMT NUMERIC(24,4) Value of Transaction
6 Tran_Units NUMERIC(24,4) No. of Units
7 Exit_load NUMERIC(20,4) Exit load charged by the PMS (in case of Full
redemption/partial redemption)
Table 6: PM_POOL DEMAT ACCOUNT HOLDING
PM_POOL DEMAT ACCOUNT HOLDING
SN Field Name Type Remarks
1 PM_SEBI_REG_NO VARCHAR2(20) SEBI Registration Number of Portfolio Manager
2 PM_PAN VARCHAR2(10) PAN of PMS
3 PM_BOID VARCHAR2(20) BOID of the PMS (Pool Account)
4 ISIN VARCHAR2(20) ISIN of the security
5 HOLDING QTY NUMERIC(24,4) Holding in qty/units (with Fraction)
6 HOLDING DATE Date In DDMMYYYY format
*Client may have multiple pool demat accounts. Rows 3,4,5 and 6 shall be reapeated if PM has more than
one pool account
Page 84 of 100
Table 7: CLIENT_HOLDING_MASTER
CLIENT_HOLDING_MASTER
SN Field Name Type Remarks
1 HOLDING DATE DATE Holding date in YYYY-MM-DD format
2 PMS REG NO VARCHAR2(30) SEBI registration of the Portfolio Manager
3 CLIENT_FOLIO VARCHAR2(20) Folio number of the client
4 INVESTMENT_TYPE VARCHAR2(20) Nature of Investment
(Equity/Debt/Derivatives/Mutual Fund/Others)
5 ASSET_TYPE VARCHAR2(20) Asset Type
(For Equity - Equity Shares
For Debt - Plain Debt, Structure Debt
For Derivatives - Futures, Options
For Mutual Funds - MF Units, Overseas Units
Others - REIT/INVIT/Others)
6 ISSUER_NAME VARCHAR2(20) issuer name
7 SECURITY_NAME VARCHAR2(20) Name of the security
8 ISIN VARCHAR2(20) ISIN of security
9 ASSOCIATION_FLAG NUMBER(1) 0 - if security is not of associate/related party 1 -
if security is of associate/related party.
10 LISTING STATUS NUMBER(25,2) 0 - If security is unlisted
1- If security is listed
11 RATING NUMBER(25,2) Security rating in case of Debt/hybrid securities
12 RATING_AGENCY VARCHAR2(20) Rating agency
13 QUANTITY VARCHAR2(20) Quantity
14 UNIT_PRICE NUMBER(30,6) Market Price or valuation price of the security
15 MARKET_VALUE NUMBER(30,6) Market Value of securities
16 MATURITY_DATE Date Maturity Date (in case of debt instrument)
17 OPTION_TYPE VARCHAR2(20) Option Type (Call or Put)
Table 8: PM_LEVEL_EXPENSE:
PM_LEVEL_EXPENSE
SN Field Name Type Remarks
1 PM_SEBI_REG_NO VARCHAR2(20) SEBI Registration Number of Portfolio Manager
2 accrual_date Date Date of booking the expense
Page 85 of 100
3 expense_date Date Date of payment to the vendor
4 VENDOR_PAN VARCHAR2(20) PAN of the vendor from whom the service taken
5 VENDOR_NAME Name of the vendor from whom the service
taken
6 NATURE_OF_SERVICE VARCHAR2(20) Nature of Service provided by Vendor, i.e.
Broking
Custody
DP
Fund Accounting
RTA
Distributor Commission
Others
7 ASSOCIATE_FLAG VARCHAR2(20) Whether the vendor is associate of PMS (0 for
No and 1 for Yes)
8 AMOUNT_PAID VARCHAR2(20) Amount paid
9 frequency VARCHAR2(20) whether monthly, quarterly, yearly, etc.
Table 9: CLIENT_EXPENSE_MASTER:
CLIENT_EXPENSE_MASTER
SN Field Name Type Remarks
1 Expense_Date Date Date of the expense charged
2 PM_SEBI_REG_NO VARCHAR2(20) SEBI Registration Number of Portfolio Manager
3 CLIENT_FOLIO VARCHAR2(10) Folio Number of the client
4 EXPENSE_TYPE VARCHAR2(20) Type of Fees (i) PMS Fees (ii) Operating Fees
5 EXPENSE_SUB_TYPE VARCHAR2(50 In case of PMS Fees, either Management Fees
(fixed) or Performance Fees (variable).
In case of Operating Expenses: (Account
Opening charges including stamp duty /Audit
Fee/ Bank charges/Fund Accounting
charges/Custody Fee/demat charges or other
miscellaneous expense)*
In case of STT, actual STT charged to the client
6 EXPENSE_VALUE NUMERIC(20,4) Amount of the expense charged
*for each sub type, additional row may be provided.
Page 86 of 100
Annexure 5C: Details of reporting requirements as per the provisions of the
Master Circular
Details of the requirements prescribed under various clauses of this Master Circular
that are covered through the offsite inspection reporting formats, are as under:
Paragraph Requirement Table Reference
No.
2.3.3 At the time of on-boarding of clients directly, no Client Master, Client Folio
charges except statutory charges shall be levied. Master and Client Expense
Master
2.5.1.1 The first single lump-sum investment amount Client Master and Client
received as funds or securities from clients should Capital Transaction
not be less than Rs.50 Lakh
3.2.2 Portfolio Managers can invest in derivatives on the Client Folio Master
terms specified in the Portfolio Management
Agreement.
3.2.3 The total exposure of the portfolio client in Client Folio AUM and Client
derivatives should not exceed his portfolio funds Holding Master
placed with the Portfolio Manager
3.3.2.3 Portfolio Managers may participate in Exchange Client Folio Master
Traded Commodity Derivatives after entering into
an agreement with the clients.
3.4.2 Portfolio Manager shall invest up to a maximum of Client Folio Master, Client
30 percent of their client’s portfolio (as a Folio AUM and Client
percentage of the client’s assets under Holding Master
management) in the securities of their own
associates/related parties.
3.6.2 Portfolio Managers offering discretionary portfolio Client Holding Master
management services shall not make any
investment in below investment grade securities.
3.6.3 Portfolio Managers offering non-discretionary Client Folio AUM and Client
portfolio management services shall not make any Holding Master
investment in below investment grade listed
securities. However, Portfolio Manager may invest
up to 10% of the assets under management of such
clients in unlisted unrated securities of issuers
other than associates/related parties of Portfolio
Manager.
Page 87 of 100
Paragraph Requirement Table Reference
No.
6.1.3.3 Operating expenses excluding brokerage, over Client Folio AUM and Client
and above the fees charged for Portfolio Expense Master
Management Service, shall not exceed 0.50% per
annum of the client's average daily AUM.
6.1.3.4 Charges for all transactions in a financial year PM Level Expense Master
(Broking, Demat, custody etc.) through self or
associates shall be capped at 20% by value per
associate (including self) per service.
6.1.3.6 Profit/ performance shall be computed on the basis Client Expense Master
of high water mark principle over the life of the
investment, for charging of performance / profit
sharing fee.
6.1.4.1 Exit Load levied by PMS Client Capital Transaction
Page 88 of 100
Annexure 5D: Format of Quarterly Reporting to Client
Account Statement for Quarter ended ___________
Email ID:_________
Tel Number:________
Name of Distributor:_________
A. Account Overview:
Name of the Client*
PAN*
Address
Email
Phone number
Unique Client Code
Account Activation date
Type of Portfolio Management Service
Investment approach for the account
Benchmark for the investment approach
Amount managed under the Investment
Approach
% AUM under investment approach
Notes:
(i) If multiple investment approaches are used for management of the client
account, separate reports may be used for each such Investment Approach.
(ii) Details of joint holder, if applicable, needs to be provided
(iii) In case of Clients coming from Direct plan, provide input as “Direct Plan” under
head Name of Distributor
(iv) For any request for change of facts as appearing above, kindly get in touch with
[Email ID] or [Phone Number]
(v) AUM reported shall be the total assets managed by the Portfolio Manager for
the particular Client PAN
Page 89 of 100
(vi) Inputs with regards to investment approach and benchmark may not be
applicable for Co-investment services
B. Portfolio Details:
Portfolio Allocation
Type of Security Purchase Value Market Value (as on % of Assets Under
quarter end) Management
(in Rs) (in Rs)
Equity
Plain Debt
Structured Debt
Equity Derivatives
Commodity
Derivatives
Goods
Mutual Funds
Cash and equivalent
Other Assets
Total
Note:
(i) Portfolio Managers offering Co-investment services, may provide details as
applicable, for assets permitted to be managed by them.
Portfolio Summary
Particulars (in Rs)
Portfolio Value at the beginning of quarter
Portfolio Value at the end of quarter
For the quarter
1. Capital Inflow
2. Capital Outflow
Page 90 of 100
3. Interest Income
4. Dividend Income
5. Other Income
6. Management Fee
7. Performance Fee
8. Expenses at actuals
9. Other expenses
10. Realized Gain/ Loss
11. Unrealized Gain/ Loss
Commission paid to Distributor
Brokerage paid
Note:
(i) Portfolio Managers offering Co-investment services, may provide details as
applicable
C. Performance of Portfolio
Disclaimer: Performance data for Portfolio Manager and Investment
Approach provided hereunder is not verified by any regulatory authority.
Performance report for Client Portfolio and Investment Approach
Particulars 1 Year 3 Years 5 Years 10 Years Since Inception
Returns of Client Portfolio
Aggregate Returns of Investment Approach
Benchmark Performance
Notes:
(i) The above returns to be calculated using Time Weighted rate of return (TWRR).
While computing returns of Investment Approach under which the Client
account is managed, all clients falling under said Investment Approach during
the relevant period have to be taken into consideration
(ii) All investments including cash and cash equivalents to be considered for
calculation of returns
Page 91 of 100
(iii) In case of a Portfolio Managers offering Co-investment services, performance
of portfolio may be calculated and disclosed, as agreed between the Co-
investment Portfolio Manager and the co-investor
D. Transaction Details:
(i) Capital Contribution (from inception till end of reporting period)
Date Capital Inflow Capital Outflow
Total
(ii) Investments (during the reporting period)
Security Transactio Buy / Quantity Gross Net Rate* Net
Name n Date Sell Rate Transaction
Value
 Report to clarify calculation of Net Rate
(iii)Holding Report as of end of quarter
Security Name Quantity Average Market Total Market % to
Cost Rate Cost Value Portfolio
Equity
A:
B:
Debt
A:
B:
Page 92 of 100
Security Name Quantity Average Market Total Market % to
Cost Rate Cost Value Portfolio
Mutual Funds
A:
B:
Commodities
A:
B:
Other Assets
Cash & Cash
Equivalent
Total
Note:
(i) Portfolio Managers offering Co-investment services, may provide details as
applicable, for assets permitted to be managed by them
E. Other Important Information
1. With regard to client portfolio, deviations from investment approach, if any
2. With regard to debt securities, details of any delay in coupon payments, if any
3. With regard to debt securities, details of default, if any
4. With regard to portfolio allocation in equity and commodity derivatives, details
of funds and securities held as collateral, if any.
5. Details of Other assets outstanding to be received in Clients account for more
than 3 months from the due date
Nature of Asset Outstanding
amount (In Rs.)
a. Coupon Payments
b. Dividends
c. Others
Total
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6. Investments in the securities of associates/related parties of Portfolio Manager:
a. Transaction wise
Sr. Issuer Type of ISIN Transaction wise Details
No. name security Transaction Buy/sell Quantity Gross Net
date transaction transaction
value (INR in value (INR in
crores) crores)
b. Security wise
Sr. Issuer Type of ISIN Security wise Details
No. name security Investment Value of percentage percentage
amount (cost investments as of client’s of PM’s
of investment) on last day of AUM as on AUM as on
as on last day the previous last day of last day of
of the quarter (INR in the the previous
previous crores) previous quarter (INR
quarter (INR in quarter in crores)
crores) (INR in
crores)
c. Details regarding passive breach of investment limits:
Details of steps taken, if
Sr. Details of Date of passive any, to rectify the passive Date of Whether rectified
No. passive breach breach breach of limits rectification within 90 days
d. Details of credit ratings of investments in debt and hybrid securities.
7. Any other important information.
8. Portfolio Managers offering Co-investment services, may provide investment
data, wherever applicable on cost basis or as may be specified by SEBI
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Annexure 7A: Format of Complaint data to be displayed by the Portfolio
Managers
Format for investor complaints data to be disclosed by Portfolio Managers on their
website on monthly basis:
Data for the month ending - _______
Sr. Received Pending Received Resolved* Total Pending Average
No. from at the Pending# complaints Resolution
end of > 3 months time^ (in
last days)
month
1 Directly
from
Investors
2 SEBI
(SCORES)
3 Other
Sources (if
any)
Grand
Total
^ Average Resolution time is the sum total of time taken to resolve each complaint
in days, in the current month divided by total number of complaints resolved in the
current month.
Trend of monthly disposal of complaints
Sr. Month Carried forward from Received Resolved* Pending#
No. previous month
1 April, YYYY
2 May, YYYY
3 June, YYYY
4 …………
5 March, YYYY
Grand Total
*Inclusive of complaints of previous months resolved in the current month.
#Inclusive of complaints pending as on the last day of the month
Trend of annual disposal of complaints
SN Year Carried forward from Received Resolved** Pending##
previous year
1 2018-19
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2 2019-20
3 2020-21
Grand Total
** Inclusive of complaints of previous years resolved in the current year.
## Inclusive of complaints pending as on the last day of the year.
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Annexure Z: List of Circulars Rescinded
Sr. No. Date of Subject Circular Ref. No.
1. October Format of Half Yearly RPM circular No.1(93-94)
20, 1993 Report and Guidelines for
advertisement
2. September Clarification for definition RPM CIRCULAR NO.1 (2002-
17, 2002 of associates 2003)
3. January Application procedure for SEBI/RPM CIRCULAR NO.2
14, 2003 registration/renewal as (2002-2003)
Portfolio Manager
4. February Clarification for SEBI/RPM CIRCULAR NO.3
05, 2003 amendment to (2002-2003)
Reg.16(1)(b) & Reg.
16(3)
5. November Improvement in corporate IMD/PMS/CIR/1/21727/03
18, 2003 governance
6. June 28, Clause in disclosure SEBI/IMD/CIR No.1/ 70353 /2006
2006 document/ agreement/
power of attorney
7. May 11, Renewal of certificate of SEBI/IMD/DOF-I/SRP/Cir No.
2007 registration 1/93251 /2007
8. February Extension in time for IMD/CIR No.1/155740/2009
27, 2009 compliance with
Regulation 16(8) of SEBI
Portfolio Managers
Regulations
9. May 11, Compliance with IMD/PMS/2/2009/11/05
2009 Regulation 16(8) of SEBI
(Portfolio Managers)
Regulations, 1993
10. June 11, Submission of Monthly SEBI/IMD/PMS/CIR-3/2009
2009 Report
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11. June 23, Maintenance of Clients’ IMD/DOF I/PMS/Cir- 4/2009
2009 Funds in a separate Bank
Account by Portfolio
Managers
12. July 31, Amendment to Additional IMD/DOF I/PMS/Cir- 5/2009
2009 Information for
registration / renewal
applications
13. September Compliance with IMD/DOF-1/PMS/CIR-6/2009
10, 2009 Regulation 16(8) of SEBI
(Portfolio Managers)
Regulations, 1993
14. March 15, Half Yearly Reporting by IMD/DOF-1/PMS/Cir-1/2010
2010 Portfolio Managers
15. September Online processing of N.A.
21, 2010 Portfolio Manager
Applications
16. October Portfolio Managers - Cir. /IMD/DF/13/2010
05, 2010 Regulation of fees and
charges
17. October Portfolio Managers - Cir. /IMD/DF/14/2010
08, 2010 Monthly Report
18. November Portfolio Managers – Cir. /IMD/DF/16/2010
02, 2010 clarification on minimum
investment amount by
clients, performance of
portfolio and schemes
19. July 16, Deployment of client Cir. /IMD/DF-1/16/2012
2012 funds in liquid mutual
fund
20. May 22, Participation of Portfolio SEBI/HO/IMD/DF1/CIR/P/2019/066
2019 Managers in Commodity
Derivatives Market in
India
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21. February Guidelines for Portfolio SEBI/HO/IMD/DF1/CIR/P/2020/26
13, 2020 Managers
22. March 30, Relaxation in compliance SEBI/HO/IMD/DF1/CIR/P/2020/57
2020 with requirements
pertaining to Portfolio
Managers
23. September Operating Guidelines for SEBI/HO/IMD/DF1/CIR/P/2020/169
09, 2020 Portfolio Managers in
International Financial
Services Centre
24. January Monthly Reporting of SEBI/HO/IMD/DF1/CIR/P/2021/02
08, 2021 Portfolio Managers
25. May 12, Procedure for seeking SEBI/HO/IMD/IMD-
2021 prior approval for change I/DOF1/P/CIR/2021/564
in control of SEBI
registered Portfolio
Managers
26. December Transaction in Corporate SEBI/HO/IMD/IMD-
09, 2021 Bonds through Request I/DOF1/P/CIR/2021/678
for Quote platform by
Portfolio Management
Services (PMS)
27. December Publishing of Investor SEBI/HO/IMD/IMD-
10, 2021 Charter and disclosure of II_DOF7/P/CIR/2021/681
Investor Complaints by
Portfolio Managers on
their websites
28. December Clarification regarding SEBI/HO/IMD/IMD-
10, 2021 amendment to SEBI I/DOF1/P/CIR/2021/0000000679
(Portfolio Managers)
Regulations, 2020
29. December Portfolio Management SEBI/HO/IMD/IMD-
21, 2021 Services for Accredited I/DOF1/P/CIR/2021/693
Investors
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30. June 02, Procedure for seeking SEBI/HO/IMD-1/
2022 prior approval for change DOF1/P/CIR/2022/77
in control of Portfolio
Managers (NCLT)
31. August Circular for Portfolio SEBI/HO/IMD/IMD-
26, 2022 Managers I/DOF1/P/CIR/2022/112
32. September Circular for Portfolio SEBI/HO/IMD/IMD-I
30, 2022 Managers DOF1/P/CIR/2022/133
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