Portfolio Managers - Clarification on minimum investment amount etc

¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã Securities and Exchange Board of India CIRCULAR Cir. /IMD/DF/16/2010 November 02, 2010 All Portfolio Managers Dear Sir/ Madam, Sub: Portfolio Managers – clarification on minimum investment amount by clients, performance of portfolio and schemes

1. Portfolio Managers are registered and regulated under the SEBI (Portfolio
   Managers) Regulations 1993.
2. SEBI has come across lack of uniformity in practice relating to following issues
   pertaining to portfolio managers:
   a) There have been instances of portfolio managers accepting funds or securities less than 5lakh from clients and opening client accounts on the basis of the client‟s commitment that 5lakh would be brought in soon. Also there have been instances of committed amounts being higher than the prescribed minimum of 5lakh while the initial amount collected from the client could be below 5lakh. b) It is seen that many portfolio managers are not making adequate disclosure regarding portfolio performance in the disclosure document. c) SEBI vide notification dated August 11, 2008 deleted the word „Scheme‟ from PMS Regulations. However, it is seen that in some cases, portfolio managers still group portfolios in separate investment categories and term them as „schemes‟
3. In order to bring about greater uniformity, clarity and transparency with regard to
   above issues, portfolio managers are advised to ensure the following; a) To ensure compliance with regulation 15(1A) of SEBI (Portfolio Managers) Regulations, 1993, it is clarified that the first single lump-sum investment amount received as funds or securities from clients should not be less than `5 Lakh.

¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã Securities and Exchange Board of India b) To ensure compliance with regulation 14(2)(b)(iv) of SEBI (Portfolio Managers) Regulations, 1993, Portfolio Managers shall disclose the performance of portfolios grouped by investment category for the past three years as per the enclosed prescribed tabular format. Portfolio Managers shall also ensure that the disclosure document is given to all clients along with the account opening form at least two days in advance of signing of the agreement. In order to ensure that the clients have access to updated information about the portfolio manager, portfolio managers shall place the latest disclosure document on their website, wherever possible. c) Portfolio Managers shall not organize investment portfolios as „Schemes‟ akin to Mutual Fund Schemes while marketing their services to clients.
4. 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 the provisions of Regulation 39 of the SEBI (Portfolio Managers) Regulations, 1993, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
5. This circular is available on SEBI website at www.sebi.gov.in under the category
“Legal Framework” and under the drop down “Portfolio Managers”. Yours faithfully, Maninder Cheema Deputy General Manager maninderc@sebi.gov.in

¼ããÀ¦ããè¾ã ¹ãÆãä¦ã¼ãîãä¦ã ‚ããõÀ ãäÌããä¶ã½ã¾ã ºããñ¡Ã Securities and Exchange Board of India Annexure Format for disclosure of Performance of the Portfolio Manager for the last 3 years (Regulation 14(2)(b)(iv) of SEBI (Portfolio Managers) Regulations, 1993) Current Year (April 01 – as on date) Year 1 (Financial year) Year 2 (Financial year) Year 3 (Financial year) Portfolio Performance (%), Net of all fees and charges levied by the portfolio manager. Benchmark Performance %