SEBI provides exemption to CMAs from seeking registration as Investment Advisers with SEBI
Securities and Exchange Board of India (SEBI) has issued a circular dated September 26, 2024, addressing the registration requirements for members of the Institute of Cost Accountants of India (ICMAI) as Investment Advisers (IAs). According to sub-regulation (f) of regulation 4 of the Investment Advisers Regulations, 2013, ICMAI members are exempt from SEBI registration if they provide investment advice incidental to their professional services. This exemption applies only when investment advice is not their primary business activity. For clarification, two scenarios are outlined: (1) if a practicing cost accountant offers investment advice as part of a consultancy assignment, it is considered incidental, and registration is not required; (2) if the cost accountant engages in investment advisory services as a primary activity, registration with SEBI is mandatory. SEBI encourages ICMAI to inform its members about these regulations and ensure compliance. Additional resources, including FAQs on investment advisers, are available on SEBI’s website.
Securities and Exchange Board of India
GENERAL MANAGER
MARKET INTERMEDIARIES REGULATION
AND SUPERVISION DEPARTMENT – POD
SEBI/HO/MIRSD-PoD-1/P/OW/2024/30500/1
September 26, 2024
President
THE INSTITUTE OF COST ACCOUNTANTS OF INDIA
CMA Bhawan
12, Sudder Street, Kolkata – 700016
Dear Sir/Madam,
Sub: Regarding exemption provided to members of ICMAI from registration as Investment Advisers with SEBI
1. In terms of sub-regulation (f) of regulation 4 of Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 (“IA Regulations”), members of Institute of Cost Accountants of India (“ICMAI”) are inter alia exempted from seeking registration as Investment Adviser (“IA”) with SEBI subject to the fulfilment of the conditions stipulated therefor. This provision shall apply to any member of ICMAI who provides investment advice to their clients, incidental to his professional service.
2. FAQs on lAs available on SEBI website, provide further clarity on the same. It is inter alia specified under the FAQs that investment advisory services in securities to clients which is not the main activity of members of ICMAI shall be required to be carried out after obtaining registration from SEBI.
3. In this regard, the necessary provisions are provided under IA Regulations and FAQs on lAs which are available in public domain on SEBI website <www.sebi.gov.in>. ICMAI is requested to bring the same to the notice of their members. Further, ICMAI may sensitise and advise all its members to comply with the said provisions.
Yours faithfully,
GM (Aradhana Verma)
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Clarification on the SEBI Circular on Investment Advisers dated 26th September 2024
The said SEBI Circular stipulates that the members of the Institute of Cost Accountants of India who provide investment advice to their client incidental to their professional services are exempted from obtaining registration under the Investment Advisers Regulations.
After going through the same and the FAQs on SEBI (IA) Regulations 2013 there can be two scenarios to understand the ‘INCIDENTAL’ activity:
Scenario 1: A Practicing Cost Accountant as part of his consultancy assignment is providing advice to his client for investing in a particular equity / security then it will be treated as incidental to his profession as a Consultant. He shall be exempted from obtaining registration under the Investment Advisers Regulations of SEBI.
Scenario 2: The Cost Accountant is providing ‘Investment Advisory Services’ in Securities as an activity or business to clients or investors then it will not be treated incidental to his main activity. He shall be required to get registration as an Investment Adviser.
For registration as Investment Adviser under the SEBI, the member may go through the FAQs on SEBI (IA) Regulations 2013.
