Clarification regarding amendment to SEBI (Portfolio Managers) Regulations, 2020 vide SEBI Circular No. SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2021/0000000679 Dtd. 10th December, 2021
The SEBI (Portfolio Managers) Regulations, 2020 (PMS Regulations) were amended by SEBI (Portfolio Managers) (Fourth Amendment) Regulations, 2021 vide notification no. SEBI/LAD-NRO/GN/2021/58 dtd. 09th November, 2021, to facilitate co-investment by investors of Alternative Investment Funds (AIF) through the portfolio management route.
In this regard the Board has issued the following clarification:
| Sr. No. | Particulars | Comments/ Remarks |
| 1 |
Procedure for undertaking of Co-investment portfolio management services: The Co-investment portfolio management services shall be provided in the following manner: i. A Manager of an AIF who is also a SEBI registered Portfolio Manager, and intends to offer Co-investment services through portfolio management route, shall do so only under prior intimation to SEBI. ii. Any other Manager who is not a SEBI registered Portfolio Manager, and intends to offer Co-investment services through portfolio management route, shall seek registration from SEBI as a Portfolio Manager in terms of the PMS Regulations. Pursuant to 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 PMS Regulations including eligibility criteria, and with the prior approval of SEBI. |
a. Manager of an AIF who is also SEBI registered Portfolio Manager: Prior intimation to SEBI. b. Any other Manager who is not a SEBI registered Portfolio Manager (PM): Such person shall firstly register himself as a PM with SEBI and the registration will be valid to the extent of providing Co-investment services through portfolio management route. Post to such registration, if he wants to offer portfolio management services other than Co-investment, then he has to comply with all provisions of the PMS Regulations and shall also take prior approval of SEBI. |
| 2 | Periodic reporting by Portfolio Managers
i. In partial modification to provisions of Circular No. SEBI/HO/IMD/DF1/CIR/P/2021/02 dated January 08, 2021, Portfolio Managers shall submit a monthly report regarding their portfolio management activity, on SEBI Intermediaries Portal within 7 working days of the end of each month, as per the revised format enclosed at Annexure A, which includes details of Co-investment offered by Portfolio Manager. ii. Further, in modification to paragraph D.12 of Circular No. SEBI/HO/IMD/DF1/CIR/P/2020/26 dated February 13, 2020, Portfolio Managers shall furnish a report to their clients on a quarterly basis, as per the revised format enclosed at Annexure B, which includes details of Co-investment offered by Portfolio Manager. |
Revised formats for monthly reports to SEBI and quarterly reports to clients are introduced so as to include the component of Co-investment offered by Portfolio Manager. The reporting requirements as per the revised formats shall be applicable from 1st April, 2022 onwards. |
| 3 | Fees and charges
In partial modification to paragraph A.3 of Circular No. SEBI/HO/IMD/DF1/CIR/P/2020/26 dated February 13, 2020, the provisions with respect to fees and charges as specified therein, shall not be applicable to Co-investment services. The provisions of the aforesaid paragraph A.3 shall remain unchanged for portfolio management services other than Co-investment. |
The rules regarding fees and charges as provided in the mentioned Circular shall not extend to Co-investment services. |
| 4 |
Direct on-boarding of clients by Portfolio Managers In partial modification to paragraph B of Circular No. SEBI/HO/IMD/DF1/CIR/P/2020/26 dated February 13, 2020, the provisions with respect to direct on-boarding of clients by Portfolio Managers as specified therein, shall not be applicable to Co-investment services. The provisions of the aforesaid paragraph B shall remain unchanged for portfolio management services other than Co-investment. |
The rules regarding direct on-boarding of clients by Portfolio Managers as provided in the mentioned Circular shall not extend to Co-investment services. |
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Securities and Exchange Board of India
CIRCULAR
SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2021/0000000679
December 10, 2021
To,
All Portfolio Managers
Dear Sir/Madam,
Subject: Clarification regarding amendment to SEBI (Portfolio Managers) Regulations, 2020
1. The Securities and Exchange Board of India (Portfolio Managers) Regulations, 2021 (PMS Regulations) were amended vide notification dated November 09, 2021, to facilitate co-investment by investors of Alternative Investment Funds (AIF) through the portfolio management route. Copy of the notification is available at link.
In this regard, the following is specified:
Page Contents
2.1. Procedure for undertaking of Co-investment portfolio management services
The Co-investment portfolio management services shall be provided in the following manner:
i. A Manager of an AIF who is also a SEBI registered Portfolio Manager, and intends to offer Co-investment services through portfolio management route, shall do so only under prior intimation to SEBI.
ii. Any other Manager who is not a SEBI registered Portfolio Manager, and intends to offer Co-investment services through portfolio management route, shall seek registration from SEBI as a Portfolio Manager in terms of the PMS Regulations. Pursuant to 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 PMS Regulations including eligibility criteria, and with the prior approval of SEBI.
2.2. Periodic reporting by Portfolio Managers
i. In partial modification to provisions of Circular SEBI/HO/IMD/DF1/CIR/P/2021/02 dated January 08, 2021, Portfolio Managers shall submit a monthly report regarding their portfolio management activity, on SEBI Intermediaries Portal within 7 working days of the end of each month, as per the revised format enclosed at Annexure A, which includes details of Co-investment offered by Portfolio Manager.
ii. Further, in modification to paragraph D.12 of Circular No. SEBI/HO/IMD/DF1/CIR/P/2020/26 dated February 13, 2020, Portfolio Managers shall furnish a report to their clients on a quarterly basis, as per the revised format enclosed at Annexure B, which includes details of Co-investment offered by Portfolio Manager.
2.3. Fees and charges
i. In partial modification to paragraph A.3 of Circular No. SEBI/HO/IMD/DF1/CIR/P/2020/26 dated February 13, 2020, the provisions with respect to fees and charges as specified therein, shall not be applicable to Co-investment services. The provisions of the aforesaid paragraph A.3 shall remain unchanged for portfolio management services other than Co-investment.
2.4. Direct on-boarding of clients by Portfolio Managers
i. In partial modification to paragraph B of Circular No. SEBI/HO/IMD/DF1/CIR/P/2020/26 dated February 13, 2020, the provisions with respect to direct on-boarding of clients by Portfolio Managers as specified therein, shall not be applicable to Co-investment services. The provisions of the aforesaid paragraph B shall remain unchanged for portfolio management services other than Co-investment.
3. The reporting requirements as per the revised formats mentioned at paragraph 2.2 of this Circular, shall be applicable for monthly reports to SEBI and quarterly reports to clients, from the month of April 2022 onwards. The remaining provisions of this Circular shall come into effect from the date of applicability of the aforesaid notification, as available in the link.
4. This Circular is issued in exercise of powers conferred under Section 11(1) of the SEBI Act, 1992 read with the provisions of Regulation 43 of the SEBI (Portfolio Managers) Regulations, 2020, to protect the interest of investors in securities and to promote the development of, and to regulate the securities market.
5. The circular is available on SEBI website at sebi.gov.inunder the categories “Info for –Portfolio Managers” and “Legal framework -Circulars”.
Yours faithfully,
Manaswini Mahapatra
General Manager
022-26449375
Email: manaswinim@sebi.gov.in
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Disclaimer: The author is based in Jabalpur and is a Practicing Company Secretary dealing in Corporate, Legal & Taxation services. The information contained in this write up, as provided by the author, is to provide a general guidance to the intended user. The information should not be used as a substitute for specific consultations. Author recommends that professional advice is sought before taking any action on specific issues.
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