Investor Charter in Respect of Portfolio Management Services

Securities and Exchange Board of India

Circular No. SEBI/HO/IMD/IMD-II_DOF7/P/CIR/2021/681 | Dated: December 10, 2021

To,
All Portfolio Managers

Dear Sir / Madam,

Subject: Publishing of Investor Charter and disclosure of Investor Complaints by Portfolio Managers on their websites

1. With a view to enhancing awareness of investors about the various activities which an investor deals with while availing the services provided by portfolio managers, an investor charter has been prepared by SEBI, which is placed at Annexure-A.

2. The investor charter is a brief 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.

3. Additionally, 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-B. The information shall be made available by 07^th of the succeeding month.

4. 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 SCORES website/ link to download mobile app (SEBI SCORES) may also be provided by the Portfolio Managers on their website.

5. The provisions of this circular shall come into effect from January 01, 2022.

6. This circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 read with Regulation 43 of the SEBI (Portfolio Managers) Regulations, 2020, to protect the interests of investors in securities market and to promote the development of, and to regulate the securities market.

7. The circular is available on SEBI website at sebi.gov.in under the categories “Info for – Portfolio Managers” and “Legal framework > Circulars”.

Yours faithfully,

Dipanjan Mitra
Deputy General Manager
Investment Management Department
Tel. No. : 022-26449204
Email id – [email protected]

Annexure- A

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 PMS 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 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.

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 PMS Regulations 2020 and other SEBI notifications and circulars (“PMS Regulations”) and

b. Providing each client an audited account statement on an annual basis which includes all the details as required under the PMS Regulations.

v. Fees and Expenses

Charging and disclosure of appropriate fees & expenses in accordance with the PMS 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.

Timelines of the services provided to investors are as follows:

Notes:

1 The number of days in the above timelines indicate clear working days

D. Details of grievance redressal mechanism and how to access it

1. 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 )

2. 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.

3. The grievance redressal and dispute mechanism should be mentioned in the Disclosure Document.

4. 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.

5. 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.

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.

Annexure- B

Complaint Data to be displayed by Portfolio Managers

Format for investor complaints data to be disclosed by Portfolio Managers on their website on monthly basis:

Data for the month ending -____________

^ 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

*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

** Inclusive of complaints of previous years resolved in the current year. ## Inclusive of complaints pending as on the last day of the year.