SEBI Investment Adviser Registration: Step-by-Step Guide

SEBI Investment Adviser Registration: Step-by-Step Guide

Introduction:

The Securities and Exchange Board of India (SEBI) plays a pivotal role in ensuring the integrity and transparency of financial markets in India. A critical aspect of this role is the regulation of investment advisory services through the SEBI Investment Adviser (IA) Registration framework. Established under the SEBI (Investment Advisers) Regulations, 2013, this regulatory structure aims to formalize the practice of providing investment advice, ensuring that advisers act in the best interests of investors while maintaining high ethical standards. This article provides an in-depth exploration of the SEBI IA registration process, examining the eligibility criteria, educational qualifications, and experience requirements for individuals and entities seeking to become registered investment advisers.

It also delves into the responsibilities and obligations imposed on registered IAs, such as maintaining independence, avoiding conflicts of interest, and adhering to the prescribed code of conduct. A significant focus of the article is on the regulatory obligations concerning disclosure norms, documentation, and client interactions. Further, it examines the compliance framework and the penalties for non-compliance, highlighting the importance of regular audits and reporting mechanisms.

The article also explores the broader implications of SEBI’s regulatory approach, emphasizing its role in protecting retail investors from fraudulent or unqualified advisory services, while fostering professionalism and trust within the advisory ecosystem. By analysing the regulatory landscape and providing a comprehensive understanding of SEBI’s IA registration process, the article aims to inform aspiring investment advisers, financial professionals, and investors about the legal framework governing investment advice in India, while addressing future trends and the evolving dynamics of the advisory industry

Who Is An Investment Adviser?

As per SEBI (INVESTMENT ADVISER) REGULATIONS 2013,

“Investment adviser” means any person, who for consideration, is engaged in the business of providing investment advice to clients or other persons or group of persons and includes a person who holds out himself as an investment adviser, by whatever name called;

An investment adviser in India plays a crucial role in guiding individuals and institutions in making informed decisions about their investments. With the rapidly evolving financial markets and an increasing number of retail investors seeking professional advice, the role of investment advisers has become more important than ever.

In India, investment advisers must be registered and regulated by the Securities and Exchange Board of India (SEBI), which ensures that these advisers meet specific qualifications, ethical standards, and financial criteria to provide trustworthy advice. The SEBI (Investment Advisers) Regulations, 2013, established a comprehensive framework for the registration and operation of investment advisers.

These regulations require advisers to have adequate knowledge and experience in the securities market, as well as certifications from recognized bodies like the National Institute of Securities Markets (NISM). One of the key obligations of an investment adviser in India is to maintain a fiduciary duty, which means putting the interests of clients above their own, ensuring that the advice offered is unbiased and well-suited to the clients’ financial goals and risk profiles. Additionally, advisers must disclose any potential conflicts of interest, such as commissions or incentives received from third parties. This transparency is vital for building trust between advisers and clients.

With the rise of digital platforms, and other technology-driven solutions, the landscape for investment advisory services is continuously evolving. As a result, SEBI has also been working to update its regulations to account for the impact of technology and ensure that these platforms also adhere to the same standards of transparency and professionalism.

Ultimately, investment advisers in India serve as a bridge between complex financial products and retail investors, helping clients navigate the intricacies of the financial markets, optimize their portfolios, and achieve long-term financial security. The presence of a regulatory body like SEBI ensures that the advisory ecosystem remains professional, trustworthy, and accountable, fostering a more secure investment environment for all market participants.

Who Is An Investment Advice?

In simple terms, "investment advice" means any suggestion or guidance about buying, selling, or handling securities (like stocks, bonds, etc.). It also includes advice on managing an investment portfolio that contains securities. This advice can be given in writing, spoken, or through any form of communication and is meant to benefit the client. It also covers financial planning.

However, general advice published in newspapers, magazines, TV, radio, or online platforms that is available to everyone is not considered investment advice under these regulations.

Additionally, "trading calls" (short-term buy/sell recommendations) are also not treated as investment advice under these regulations as these are covered under RA Regulations.

What Are The Eligibility Criteria’s/ Requirements To Become An Investment Advisor?

Investment advisors in India must comply with specific regulatory requirements set by SEBI (Securities and Exchange Board of India). The following are the key criteria that an applicant must fulfil to obtain registration as an investment advisor:

1. If the Applicant is an Individual:

The applicant and all associated persons engaged in investment advisory services must possess the necessary qualifications and certification as prescribed under Regulation 7.

2. If the Applicant is a Body Corporate (Company/Firm):

The Principal Officer and all individuals associated with investment advisory services must hold the requisite qualifications and certification as per Regulation 7.

3. Deposit Requirements:

The applicant must fulfil the deposit requirements specified under Regulation 8.

4. Fit & Proper Criteria:

The applicant, its partners, the Principal Officer, and associated investment advisory personnel must meet the "Fit and Proper" criteria as outlined in Schedule II of SEBI (Intermediaries) Regulations, 2008.

5. Infrastructure Requirements:

The applicant must have adequate infrastructure to effectively provide investment advisory services.

6. Previous SEBI Certificate Rejection:

If the applicant or any directly/indirectly associated person has previously had an application for a certificate rejected by SEBI, the reasons for such rejection will be examined.

7. Disciplinary Actions Record:

If the applicant or any associated individual has been subject to disciplinary action by SEBI or any other regulatory authority, the details of such actions will be considered.

8. Special Provisions for Foreign Entities:

Any entity incorporated outside India that wishes to provide investment advisory services under these regulations must first establish a subsidiary in India. Only this subsidiary can apply for registration as an investment advisor.

Ensuring compliance with these regulations is crucial for securing SEBI registration as an investment advisor in India. Any discrepancies in meeting the criteria can lead to delays or rejections in the approval process.

WHAT ARE THE EDUCATIONAL QUALIFICATIONS REQUIRED?

An individual investment adviser or a principal officer of a non-individual investment adviser registered as an investment adviser under these regulations, shall have the following minimum qualification, at all times – A professional qualification or [graduate degree or] post-graduate degree or post graduate diploma (minimum two years in duration) in finance, accountancy, business management, commerce, economics, capital market, banking, insurance or actuarial science [or other financial services as may be specified] from a university or an institution recognized by the Central Government or any State Government or a recognised foreign university or institution or association or a professional qualification by completing a Post Graduate Program in the Securities Market (Investment Advisory) from NISM of a duration not less than one year or a professional qualification by obtaining a CFA Charter from the CFA Institute

WHAT ARE THE CERTIFICATION REQUIREMENTS?

Any Individual Investment Adviser or Principal Officer of a Non-Individual Investment Adviser, as well as all individuals engaged in investment advisory services, must pass both of the following certification examinations:

1. NISM-Series-X-A: Investment Adviser (Level 1) Certification Examination

2. NISM-Series-X-B: Investment Adviser (Level 2) Certification Examination

IS THERE ANY EXPERIENCE REQUIRED?

After the December 2024 amendment, experience is no longer required to become an Investment Adviser (IA).

Earlier, "SEBI Regulations mandated graduation in any discipline with an experience of 5 years", but this requirement has been removed following the December 2024 amendment.

IS THERE ANY NET-WORTH CRITERIA TO BE FULFILLED?

The net worth requirement has now been removed, and a new deposit criterion has been implemented under Regulation 8 of SEBI Amended Regulations.

This deposit will be marked as a lien in favour of the Investment Advisor Administration and Supervisory Body (IAASB). Currently, the responsibility of IAASB has been assigned to BSE Ltd.

DEPOSIT SLAB

WHAT IS THE FEES’ STRUCTURE TO GET REGISTERED AS AN INVESTMENT ADVISOR?

1. Application Fees:

2. Registration Fees:

3. Renewal Fees:

HOW TO GET REGISTERED AS AN IA (INVESTMENT ADVISER)?

Let’s See the step-by-step process to get registered as an IA:

• Step 1: URL for registering as an Investment Adviser (IA) & Research Analyst (RA) bseindia.com
• Step 2: Registration as a New User à Click on ‘Register’. Create your login credentials and register yourself on BSE portal.

• Step 3: Complete registration process by verifying your mobile and email OTP.

For registration as Investment Adviser select type as IA and for registration as Research Analyst select type as RA.

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• Step 4: Once the login is created you need to login into Portal using your credentials.

• Step 5: Click on “New Application” Select Application Type & Entity Type from the drop down as shown below and additionally select Applicant category for RA.

• Step 6: All the Tabs as per “Form A” will be visible, now start filling details in all the 12 tabs one by one.

• Step 7: You will find below fields in Applicant Details Tab. Fill data in the field available under Applicant Details Tab and provide the needful attachments (Ensure that declarations are given on letterhead, duly signed, dated and less than 2 MB pdf file). On completion of filling the data click on Save & Draft and further Save & Next. Once you proceed to the next tab you will get a green tick ✅ on the previous tab

• Step 8: You will find below fields in Address Details Tab. Fill data in the field available under Address Details Tab as per “Address type” selected from below dropdown and provide the needful attachments (Ensure that declarations are given on letterhead, duly signed, dated and less than 2 MB pdf file). Once you fill the address for a particular address type for e.g. Correspondence address you need to click on ‘Add’ button towards the end of the page. Now proceed to fill the Address details for the next address type. Follow the same procedure for filling all the address types. Registered, correspondence, principal place of business and billing address are mandatory to fill. On completion of filling of all mandatory address type. Click on ‘Next’ and you will be redirected to next tab.

• Step 9: You will find below fields in Other Details Tab. Fill data in the field available under Other Details Tab and provide the needful attachments (Ensure that declarations are given on letterhead, duly signed, dated and less than 2 MB pdf file). On completion of filling the data click on Save & Draft and further Save & Next. Once you proceed to the next tab you will get a green tick ✅ on the previous tab.

• Step 10: A. Personnel Details for Non-Individual Entity. You will find below fields in Personnel Details Tab. Fill data in the field available under Personnel Details Tab as per “Select type” selected from the below dropdown and provide the needful attachments (Ensure that declarations are given on letterhead, duly signed, dated and less than 2 MB pdf file). (For Entity type Partnership, Body corporate & Company). Similar to the process mentioned in point number 8 follow the steps to add the different types of Personnel Details. After which your need to upload attachments (Ensure that declarations are given on letterhead, duly signed, dated and less than 2 MB pdf file) and click on ‘Save as Draft’ and ‘Save & Next’ to proceed to the next tab.

• Step 10: B. Personnel Details for Individual Entity. For entity type ‘Individual’: You will find below fields in Personnel Details Tab. Fill data in the field available under Personnel Details Tab as per “Select type” selected from the below dropdown and provide the needful attachments (Ensure that declarations are given on letterhead, duly signed, dated and less than 2 MB pdf file). Similar to the process mentioned in point number 8 follow the steps to add the different types of Personnel Details. After which your need to upload attachments (Ensure that declarations are given on letterhead, duly signed, dated and less than 2 MB pdf file) and click on ‘Save as Draft’ and ‘Save & Next’ to proceed to the next tab.

• Step 11: You will find below fields in Share Holder Details Tab. Fill data in the field available under Share Holder Details Tab as per “Particulars of Major Shareholder Type” selected from below dropdown provide the needful attachments (Ensure that declarations are given on letterhead, duly signed, dated and less than 2 MB pdf file). Follow Steps mentioned in point number 8 and proceed with your filling.

• Step 12: You will find below fields in Other Registration Details Tab. Fill data in the field available under Other Registration Details Tab by selecting as per your details as whether “Yes or No” and provide the needful attachments (Ensure that declarations are given on letterhead, duly signed, dated and less than 2 MB pdf file). Click on ‘Save as Draft’ and further ‘ Save & Next’ .

• Step 13: You will find below fields in Infrastructure Facilities Tab. Fill data in the field available under Infrastructure Facilities Tab as per “Items” selected from below dropdown and provide the needful attachments (Ensure that declarations are given on letterhead, duly signed, dated and less than 2 MB pdf file).

Follow Steps mentioned in point number 8 and proceed with your filling.

• Step 14: You will find below fields in Other Information Tab. Fill data in the field available under Other Information Details Tab by selecting as per your details as whether “Yes or No” and “Status” selected from the below dropdown and provide needful attachments (Ensure that declarations are given on letterhead, duly signed, dated and less than 2 MB pdf file).

Follow Steps mentioned in point number 8 and proceed with your filling.

• Step 15: You will find below fields in Change in Control Tab. Fill needful data in the field available under Change in Control Tab by selecting as per your details whether “Yes or No” and provide needful attachments (Ensure that declarations are given on letterhead, duly signed, dated and less than 2 MB pdf file). Click on ‘Save as Draft’ and Further “Save & Next’.

• Step 16: You will find below fields in Questions Tab. Fill needful data in the field available under Questions Tab and provide the needful attachments (Ensure that declarations are given on letterhead, duly signed, dated and less than 2 MB pdf file). Click on ‘Save as Draft’ and Further “Save & Next’.

• Step 17: You will find below fields in Bank Details Tab. Fill needful data in the field available under Bank Details and provide the needful attachments (Ensure that declarations are given on letterhead, duly signed, dated and less than 2 MB pdf file). In the Primary bank account details select ‘Primary Bank Account Details (Default Bank)’ for the Default Bank selection. Click on ‘Add & Save ’button to add secondary/ next bank details and Further “Save & Next’ proceed to the next tab.

• Step 18: You will find below point of declaration under Declaration Tab. Read the declaration points  Click on “I Agree” checkbox and click in ‘Submit’ button to final submit the application.

• Step 18: You will find below point of declaration under Declaration Tab. Read the declaration points  Click on “I Agree” checkbox and click in ‘Submit’ button to final submit the application.

• Step 19: In the “My Application’ tab you may find the application status and other relevant details pertaining to your application.

WHAT ALL LEGAL PAPERWORK IS REQUIRED ALONG?

1. Undertaking of moving compliance

2. Declaration for not being registered as Authorised Person with any Stock Exchange or with AMFI OR Declaration for relinquishment from AMFI or from Authorised Person ship.

3. Declaration for Client Level Segregation of advisory and distribution activities (Regulation 2

4. Declaration for no ownership/ directorship/partnership interest.

5. Declaration regarding registration as an Investment Adviser

6. Consent to use Aadhaar card copy.

7. Declaration regarding Infrastructure.

FEES AN IA CAN CHARGE?

The maximum fee that may be charged by the IA under the fixed fee mode now stands revised and shall not exceed ₹1,51,000 per annum per family of client. The fee limit shall be revised and announced by IAASB once in three years based on the Cost Inflation Index (CII) after due consultation with SEBI.

In terms of the earlier provisions, IA could charge fees from a client under anyone mode, i.e., Assets under Advice (AUA) mode or fixed fee mode on an annual basis. Change of mode, if any, can be affected only after twelve months of on-boarding/last change of mode. In order to provide more flexibility in charging of fees, IAs have now been allowed to change the fee mode for a client at any time, without restriction on the minimum period between two fee mode changes. The maximum fee that can be charged by the IA shall, however, not exceed the higher of fee limit under the fixed fee mode or 2.5 per cent of AUA per annum per family of client.

The Most Important Segment ! (Frequently Asked Questions-FAQ)

1. No Renewal Required for Investment Adviser (IA) Registration:

After the December 2024 amendment, Investment Advisers (IA) will no longer be required to renew their registration.

2. Maintenance of Records:

All records must be maintained in either physical or electronic form and preserved for a minimum period of five years.

3. Functional Website Requirement:

Every Investment Adviser (IA) must maintain a functional website.

4. Appointment of a Compliance Officer:

For Individual Investment Advisers (IA): You are both the Compliance Officer and the Investment Adviser, as there is no separate requirement for a Compliance Officer under the regulations.

For Non-Individual Investment Advisers (such as Companies, LLPs): A Compliance Officer must be appointed. This can be an employee, or you can assign compliance duties to a Chartered Accountant (CA), Company Secretary (CS), or Cost Accountant (ICWA) to save costs.

5. Registration as a Part-Time Investment Adviser (IA):

Who can become a Part-Time IA?

CA (Chartered Accountant), CS (Company Secretary), ICWA (Cost Accountant), Lawyer, Doctor, Architect, Teacher/Professor, Insurance Agent And others

SEBI has left this matter unclear and somewhat confusing. For example, how can a doctor or lawyer meet the educational qualification requirements under Regulation 7?

6. Fee Structure for Investment Advisers (IA):

• Fixed Fee Mode: An IA cannot charge more than ₹1,51,000 per year per client’s family.
• Fee Limits: The maximum fee an IA can charge is either the Fixed Fee Mode limit or 2.5% of AUA (Assets Under Advice), whichever is higher. GST is not included in this amount.
• Flexibility in Changing Fee Mode: An IA can now change the fee mode at any time.
• No Fee Limit for Non-Individual Clients & Accredited Investors: Fees and payment structures will be decided through a bilateral agreement between the IA and the client.

Is it right to have a professional’s fees capped? Laws are laws—until repealed, amended, or voided, compliance is mandatory!

7. Registration as a Non-Individual Investment Adviser (IA):

If an individual IA exceeds 300 clients or earns more than ₹3 crore in total fees in a financial year (whichever comes first), they must apply for in-principal registration as a non-individual IA.

How to remain an individual IA?

Send notices to non-paying or inactive clients, cancel their client agreements, and or make agreements time-bound to ensure that only active, paying clients count toward the limit.

8. Can an IA Engage in Other Activities?

Individual Investment Advisers (IA) cannot provide distribution services, whereas Non-Individual IAs must keep investment advisory and distribution services separate at the group level. However, stock broking activities are allowed under Regulation 22 of the IA Regulations, as stock broking is not classified as a distribution activity.9. Exemptions from Registration

9. Entities do not need to register as an IA:

• Those providing general financial knowledge without recommending specific stocks.
• Insurance Agents
• Pension Advisers
• Mutual Fund Distributors
• Advocates
• CAs, CSs, ICWAs
• Stock Brokers, Sub-Brokers registered under SEBI (Stock Broker & Sub-Broker) Regulations, 1992, Portfolio Managers registered under SEBI (Portfolio Managers) Regulations, 1993, Merchant Bankers registered under SEBI (Merchant Bankers) Regulations, 1992, providing investment advice as part of their primary business, with certain conditions and guidelines
• Individuals advising only offshore clients (excluding NRIs trading in India)
• Any other category specified by SEBI

10. Benefits of IA-SEBI Registration:

Registering as an IA allows you to practice legally, without fear of penalties or fee refund obligations, while providing research advisory services independently.

11. Difference Between Research Analyst (RA) & Investment Adviser (IA):

We have a detailed video and research report on Research Analysts (RA) available on our YouTube channel @LegalCommentary and on our website www.legalcommentary.in. In summary, an Investment Adviser (IA) can provide customized investment advice, whereas a Research Analyst (RA) cannot.

12. Which Type of Registration Should You Choose?

• If you want to work independently with a limited number of clients (up to 300), opt for Individual IA Registration.
• If you want to manage more than 300 clients, it’s better to register as a Non-Individual IA.

Conclusion

The process of registering as an Investment Adviser (IA) with the Securities and Exchange Board of India (SEBI) is an essential step for professionals looking to offer advisory services in the Indian financial market. SEBI’s regulatory framework ensures that advisers meet stringent standards of professionalism, transparency, and ethics, which ultimately safeguards the interests of investors. By registering with SEBI, IAs gain access to a recognized platform that instils trust and credibility with clients, while also adhering to a set of best practices that promote investor confidence.

The registration process itself requires careful attention to compliance, including meeting educational qualifications, passing required examinations, and fulfilling ongoing reporting and disclosure obligations. This not only enhances the quality of advisory services provided but also helps create a more organized and ethical financial advisory landscape. Furthermore, SEBI’s guidelines ensure that IAs act in the best interest of their clients, avoid conflicts of interest, and maintain high levels of transparency regarding fees and investment strategies.

As the Indian financial market continues to grow, the role of investment advisers becomes increasingly significant. By securing SEBI registration, advisers position themselves as trusted experts, contributing to the financial literacy and well-being of individual and institutional investors alike. It is important for IAs to stay informed of regulatory changes, ensure continuous professional development, and maintain adherence to SEBI's evolving standards to sustain their credibility and effectiveness in the ever-changing financial environment. Through these efforts, registered IAs will continue to play a crucial role in fostering a more informed, responsible, and efficient investment ecosystem in India.

DISCLAIMER

The contents of this article are for informational purposes only. While efforts have been made to ensure accuracy and reliability, neither Advocate Vikas Gupta, any other advocate, nor the author(s) and publisher guarantee its completeness or precision. The information provided does not represent the opinions of the author, the publisher, or the organization. Readers are advised to independently analyse the information and interpret it accordingly. The author(s), publisher, and organization are not responsible for any losses or damages arising from the interpretation of this article.