Eligibility Criteria: To Become a SEBI-Registered Investment Advisor Company in India
To become a Securities and Exchange Board of India (SEBI)-registered advisor company in India, your firm must meet specific eligibility criteria outlined under the SEBI (Investment Advisers) Regulations, 2013, as amended in subsequent updates, including the SEBI (Investment Advisers) (Amendment) Regulations, 2024. Below are the key requirements for a company (non-individual entity) to qualify for registration as an Investment Adviser with SEBI:
1. Legal Structure
The applicant must be a body corporate, such as a private limited company, limited liability partnership (LLP), or any other incorporated entity recognized under Indian law.
Sole proprietorships do not qualify as non-individual entities; this applies only to incorporated firms.
2. Educational and Certification Requirements
Principal Officer: The company must designate a “principal officer” (e.g., managing director, designated director, or equivalent) responsible for overseeing the business and operations. This individual must meet the following:
A graduate degree (minimum) in any discipline, or a professional qualification or postgraduate degree/diploma in fields like finance, accountancy, business management, commerce, economics, capital markets, banking, insurance, or actuarial science from a recognized university or institution.
Certification from the National Institute of Securities Markets (NISM), specifically:
NISM-Series-X-A: Investment Adviser (Level 1) Certification Examination.
NISM-Series-X-B: Investment Adviser (Level 2) Certification Examination.
Alternatively, certifications from other NISM-accredited institutions (e.g., Financial Planning Standards Board India) may be accepted, provided they meet SEBI’s standards.
Persons Associated with Advice: Any employee or representative providing investment advice on behalf of the company must also hold the above NISM certifications.
3. Experience
The principal officer or persons associated with giving investment advice are no longer required to have mandatory prior experience (as per recent relaxations proposed in SEBI’s consultation paper of August 2024). However, having relevant experience in financial products, securities, or portfolio management can strengthen the application.
4. Net Worth Requirement
The company must maintain a minimum net worth of ₹50 lakh (INR 5 million).
Net worth is calculated as paid-up share capital plus free reserves (excluding reserves from revaluation), minus accumulated losses and deferred expenditure not written off.
A net worth certificate issued by a practicing Chartered Accountant must be submitted as proof.
5. Infrastructure
The company must have adequate infrastructure to conduct investment advisory services, including:
Office space.
Equipment and communication facilities.
Research capabilities and software for financial analysis and advisory services.
6. Fit and Proper Person Criteria
The company, its principal officer, directors, and key personnel must be deemed “fit and proper” by SEBI. This includes:
Financial integrity (e.g., no defaults or insolvency).
Good reputation and character.
No convictions for economic offenses or fraud.
A clean CIBIL score and no adverse financial history.
7. Application and Fee Structure
Application Fee: ₹10,000 (non-refundable).
Registration Fee: ₹15,000 (payable upon approval).
The application must be submitted via the SEBI Intermediary Portal (SIP) with Form A, along with supporting documents such as:
Identity and address proof of the company and principal officer.
Educational and certification documents.
Net worth certificate.
Business plan and risk management policy.
Three years of income tax returns.
Additional registration with the BSE Administration and Supervision Ltd. (BASL) is required post-SEBI approval, with fees of ₹3,00,000 + GST for non-individuals.
8. Compliance and Ethical Standards
The company must commit to acting in the best interests of clients, avoiding conflicts of interest, and maintaining transparency.
It must have a client agreement framework and adhere to SEBI’s code of conduct for investment advisers.
9. Other Considerations
The company must not engage in activities that conflict with its advisory role (e.g., distribution of securities) unless such activities are segregated as per SEBI guidelines.
Existing advisors must transition to these updated criteria within a specified timeline (typically three years from the amendment’s effective date).
Process Overview
Ensure all eligibility criteria are met.
Obtain in-principle approval from BASL (if required).
Submit the online application via the SEBI Intermediary Portal with the necessary fees and documents.
Address any clarifications sought by SEBI within the stipulated time (usually 15 days).
Upon approval, pay the registration fee and BASL membership fee to receive the SEBI registration certificate, valid for five years (renewable).
These criteria ensure that only qualified and financially sound entities can offer investment advisory services, protecting investors and maintaining market integrity. For the most current details, consult the latest SEBI regulations or the SEBI website, as requirements may evolve based on consultation papers and amendments.
To become a SEBI-registered investment advisor company in India, you must meet specific eligibility criteria and follow a detailed registration process. Here are the key requirements:
Eligibility Criteria
Educational Qualifications:
A professional qualification or postgraduate degree/diploma in fields like finance, accountancy, business management, economics, etc., is recommended, though a graduate degree is the minimum requirement.
Certifications from the National Institute of Securities Markets (NISM), such as NISM Series-XA and XB, are necessary.
Experience:
A minimum of five years of experience in activities related to the financial services industry is typically required for key personnel.
Net Worth Requirements:
For individual advisors, a minimum net worth of ₹5 lakh is required.
For non-individual entities (e.g., firms or companies), the net worth should be at least ₹50 lakh.
Additional Requirements:
A clean CIBIL score indicating good financial standing.
Submission of income tax returns for the last three years.
Adequate infrastructure to effectively discharge investment advisory services.
Registration Process
Access the SEBI Intermediary Portal:
Create an account by paying an initial registration fee (currently ₹2,000).
Complete the Application Form:
Fill out Form A with personal, educational, and professional details.
Upload necessary documents, including identity proof, address proof, qualifications, experience certificates, net worth certificate, CIBIL score, and income tax returns.
Application Review:
SEBI reviews the application and may request additional information.
Payment of Registration Fee:
Upon approval, pay the registration fee:
Individuals and firms: ₹3,000.
Corporate bodies and LLPs: ₹15,000.
Obtain Registration Certificate:
SEBI issues a registration certificate after payment confirmation.
Register with Stock Exchanges:
Registration with recognized stock exchanges like BSE is mandatory.
Compliance and Ongoing Requirements
Renew Registration: Every five years.
Annual Reports and Audits: Submit annual reports to SEBI and undergo an annual audit by a chartered accountant.
Code of Conduct: Ensure compliance with SEBI’s code of conduct and ethics.
To establish a company as a SEBI-registered Investment Advisor in India, the Securities and Exchange Board of India (SEBI) mandates compliance with specific eligibility criteria, including educational qualifications, professional experience, certification, financial net worth, and infrastructural capabilities.
1. Educational Qualifications:
The principal officer of the company must possess:
A professional qualification or a postgraduate degree/diploma in fields such as finance, accountancy, business management, commerce, economics, capital markets, banking, insurance, or actuarial science.
2. Professional Experience:
The principal officer should have a minimum of five years of experience in activities related to financial services, including financial planning, investment advisory services, or research.
3. Certification Requirements:
The principal officer and all persons associated with investment advice must obtain certifications from the National Institute of Securities Markets (NISM):
NISM-Series-X-A: Investment Adviser (Level 1)
NISM-Series-X-B: Investment Adviser (Level 2)
These certifications must be renewed every three years.
4. Net Worth Requirements:
The company must have a minimum net worth of ₹50 lakh.
5. Infrastructure Requirements:
Adequate infrastructure, including office space, IT systems, and record-keeping mechanisms, is necessary to effectively provide investment advisory services.
6. Compliance and Regulatory Obligations:
The company must adhere to SEBI’s code of conduct for Investment Advisors.
Implement robust compliance policies and procedures to prevent conflicts of interest.
Ensure timely submission of periodic reports and disclosures as mandated by SEBI.
Meeting these criteria is essential for registering a company as a SEBI-registered Investment Advisor in India.
For a comprehensive understanding of the registration process and compliance requirements, you may refer to SEBI’s official guidelines.
To become a SEBI-registered advisor company (Registered Investment Advisor – RIA) in India, you need to meet the eligibility criteria set by the Securities and Exchange Board of India (SEBI) under the SEBI (Investment Advisers) Regulations, 2013, as amended. Here’s a breakdown of the key criteria:
1. Legal Structure:
The applicant can be a company incorporated under the Companies Act, 2013, or a Limited Liability Partnership (LLP) registered under the Limited Liability Partnership Act, 2008.
2. Educational Qualification:
The company must have at least one principal officer or person associated with investment advice who possesses a professional qualification or postgraduate degree or graduate degree in finance, accountancy, business management, commerce, economics, capital markets, banking, insurance, or actuarial science.
Alternatively, holding professional certifications such as CFA, CA, CS, ICWA is also accepted for the principal officer or relevant personnel.
3. Experience Requirement:
The company needs to have a minimum of five years of experience in activities related to financial services, investment advisory services, portfolio management, or research analysis.
4. Certification Requirement:
The principal officer and all persons associated with investment advice must have passed the following certifications from the National Institute of Securities Markets (NISM):
NISM Series-X-A: Investment Adviser (Level 1) Certification Examination.
NISM Series-X-B: Investment Adviser (Level 2) Certification Examination.
These certifications need to be renewed every three years.
5. Net Worth Requirement:
For non-individual entities like companies and LLPs, the minimum net worth required is ₹50 lakh.
This net worth needs to be certified by a Chartered Accountant (CA).
6. Infrastructure Requirement:
The company must have adequate infrastructure, including office space, IT systems, and a proper record-keeping mechanism to effectively carry out investment advisory services.
7. Other Requirements:
Clean Track Record: The company, its directors, partners, and principal officers should not have any adverse regulatory history or criminal records related to financial offenses.
Compliance Policies: The company needs to have well-defined compliance policies and procedures in place to adhere to SEBI regulations.
Fiduciary Duty: The company and its advisors must act in a fiduciary capacity towards their clients, always putting the client’s interests first and providing unbiased advice.
Segregation of Services: If registered as an Investment Advisor, the company cannot engage in distribution or execution services for their advisory clients. They must follow a fee-only model.
Client Agreement: A formal client agreement must be in place before providing advisory services, outlining the scope of services, fees, and other important aspects.
Grievance Redressal Mechanism: The company must have a mechanism to address client complaints and grievances effectively.
Summary of Key Criteria for Companies/LLPs:
Legal Structure: Company or LLP.
Education: At least one qualified principal officer/advisor.
Experience: Minimum 5 years in relevant financial services.
Certification: NISM Series-X-A and X-B for principal officer/advisors.
Net Worth: Minimum ₹50 lakh.
Infrastructure: Adequate setup for advisory operations.
How to Apply:
The application process is primarily online through the SEBI Intermediary Portal. You would need to:
Register on the SEBI Intermediary Portal.
Fill out Form A for registration as an Investment Advisor.
Upload all necessary documents, including proof of identity, address, qualifications, experience, net worth certificate, business plan, and compliance policies.
Pay the applicable registration fee.
SEBI will review the application, and upon approval, you will be granted the registration certificate.
It’s important to note that SEBI regulations can be subject to amendments. Therefore, it is always advisable to refer to the latest official notifications and guidelines on the SEBI website (https://www.sebi.gov.in/) for the most up-to-date information.
