Registration Process for Portfolio Manager with SEBI - Legal Advisory Firm and Business Registration

Wednesday, September 26, 2018

Registration Process for Portfolio Manager with SEBI

Application for grant of a certificate of registration

An application by an entity for grant of a certificate of Portfolio Manager (PM) registration shall be made to the Board in Form A as prescribed by SEBI (Regulator of Portfolio Manager). SEBI has constituted a Board to scrutinize such applications.

Application to Conform to the Requirements

The applicant entity shall submit an application in a prescribed format to the SEBI office. Such application should be complete in all respects as specified in the application form. Any application which is not complete in all aspects and does not furnish all information required as per the instructions specified in the form shall be rejected by the Board.


The applicant shall be given an opportunity to remove within the specific time such objections as pointed out by the Board, before rejecting any such application.

Various requirements for scrutiny of application form submitted by the applicant

The Board shall take into account all matters which it deems relevant to the activities relating to portfolio management while considering the grant of a certificate of registration to the applicant.

The Board shall consider following points without any prejudice to the generality of the foregoing provisions:
(a) The applicant is a body corporate having registration with the Registrar of Companies.
(b) It is expected that the applicant should have adequate infrastructure facilities like sufficient office space, proper office equipment, and the staff to effectively perform the business of a portfolio manager; it must have its website and email-id for quick contact.
(c) The principal officer of the applicant company has the professional qualifications in finance, law, accountancy or business management from an institution recognized by the Government;
(d) The applicant company should have in its employment minimum of two persons and any one of them should have at least five years’ experience as portfolio manager or stockbroker or investment manager or in the areas related to funding management
(e) The applicant should submit details of any previous application for grant of certificate made by any person directly or indirectly connected with the applicant which has been rejected by the Board;
(f) If any disciplinary action has been taken by the Board against a person directly or indirectly connected with the applicant under the Act or the Rules or the Regulations made thereunder;
Under the provision of sub-clauses (e) and (f), the definition of " person directly or indirectly connected" means and implies any person being an associate, subsidiary, interconnected company or a company under the same management as per the meaning of section 370(1B) of the Companies Act,1956 or in the same group;
(g) The applicant must have the capital adequacy requirements specified in the regulation. 
(h) To mention if the applicant, its director, principal officer or the employee as specified in clause (d) is involved in any litigation connected with the securities market which has an adverse impact on the business of the applicant;
(i) The applicant, its director, its principal officer or the employee as specified in clause (d) has at any time been convicted for any offense involving moral turpitude or has been found guilty of any economic offense;
(j) The applicant is a fit and proper person;
(k) To consider if the grant of a certificate to the applicant is in the interests of investors.


The capital adequacy requirement for PM application referred to in clause (g) of regulation 6 shall not be less than the net worth of fifty lacs rupees;

Here the word "net worth" means the aggregate value of paid-up equity share capital plus free reserves (excluding reserves created out of revaluation) reduced by the aggregate value of accumulated losses and deferred expenditure not written off, including miscellaneous expenses not written off as per the audited balance sheet of the applicant.

Furnishing of further information, clarification, and personal representation

The Board may require the applicant to submit further information or clarification in connection with matters relevant to the activity of a portfolio manager for disposal of the application.

For personal representation, the applicant or, its principal officer shall appear before the Board and seek clarification, if required so.

Procedure for Registration

On submission of the required and valid documents and certificates as mentioned above, the Board on being satisfied that the applicant fulfills the requirements specified in Regulation 6 shall send an intimation of approval to the applicant and on receipt of the payment of fees by the applicant as specified in Schedule II then grant a certificate in Form B to the applicant company.

Thus, the applicant company receives the certificate of registration for Portfolio Management activity as desired to commence.

Procedure where registration is refused/not granted by the Board

Where an application for grant of a certificate under Regulation 3 or of renewal of a certificate of registration under Regulation 9 does not satisfy the requirements prescribed under Regulation 6, the Board may reject such application, after giving an adequate opportunity of presenting to the applicant.
Whenever the Board refuses to grant the approval then such refusal for grant registration shall be communicated by the Board within thirty days of refusal to the applicant stating therein the reasons on which the application has been rejected by the Board.

The applicant may approach and request the Board within a period of thirty days to reconsider its decision of rejection of his application as per the provision of sub-Regulation (3).

In such case, the Board, in turn, shall reconsider such application made under sub- Regulation (3) and further communicate its decision as soon as possible in writing to the applicant.

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