Any person who wishes to carry on investment advisory services for its clients should get themselves registered as Investment Adviser (IA) with SEBI. SEBI has specified the eligibility criteria and conditions that one must fulfill before making an application with it.
However, there are certain situations where registration with SEBI as an IA is not required. In this article, I have highlighted all the circumstances where SEBI does not want you register as an IA.
When is IA registration not necessary?
1. Any investment advice given through newspaper, magazines, any electronic or broadcasting or telecommunication medium, which is widely available to the public shall not considered as Investment Advice and hence registration with SEBI for carrying on this activity shall not be required.
2. Any person who gives general comments in good faith in regard to trends in the financial or securities market or the economic situation where such comments do not specify any particular securities or investment product.
3. Any insurance agent or insurance broker who offers investment advice solely in insurance products and is registered with Insurance Regulatory and Development Authority for such activity.
4. Any pension advisor who offers investment advice solely on pension products and is registered with Pension Fund Regulatory and Development Authority for such activity.
5. Any mutual funds distributor registered with AMFI, providing an advice to its mutual funds clients which is incidental to its distribution activity.
6. Any advocate, solicitor or law firm, who provides investment advice to their clients, incidental to their legal practice.
7. Any member of Institute of Chartered Accountants of India, Institute of Company Secretaries of India, Institute of Cost and Works Accountants of India, Actuarial Society of India, who provides investment advice to their clients, incidental to his professional service;
8. Any stock broker or sub-broker registered under SEBI (Stock Broker and Sub-Broker) Regulations, 1992, portfolio manager registered under SEBI (Portfolio Managers) Regulations, 1993 or merchant banker registered under SEBI (Merchant Bankers) Regulations, 1992, who provides any investment advice to its clients incidental to their primary activity. However, they should comply with Chapter III of the IA Regulations.
9. Any fund manager, by whatever name called of a mutual fund, alternative investment fund (AIFs) or any other intermediary or entity registered with the Board are exempted from registration under IA Regulations.
10. Any person who provides investment advice exclusively to clients based out of India. However, if such clients are non-resident Indians or Persons of Indian Origin then IA registration will be required.
11. Where an entity is registered with SEBI as an Investment Adviser, then the Principal Officer/ person associated with Investment Advice/ Partners of the firm shall not registered themselves separately as an Investment Adviser. They however, should comply with only Regulation 7 of the IA Regulations.
12. Corporate advisory services on IPOs, mergers & acquisitions, buy back, takeover, delisting, merchant banking, loan syndication etc. to an issuer, acquirer etc. do not fall under the ambit of IA Regulations.
Note: Where any activity which is not incidental to the primary activity with which one is registered, the exemption from IA registration shall not be applicable and registration with SEBI as IA will become mandatory to provide investment advice on other financial products.
Hence, if you are falling under any of the above-mentioned exemptions, then you shall not require SEBI registration as IA.
However, where you do not fall under any of the exemptions and are providing investment advice, you are required to register yourself with SEBI as IA before providing such investment advice.
Hope this clarity on if you really need to apply for SEBI as IA. In case you have any specific question or are looking for a professional help for making an application with SEBI as IA, you may write to me at [email protected] or reach out to me at +91 9148973085.