One of the requirements for a fund manager to become ‘Eligible Fund Manager’ is to be registered with SEBI under specified regulations.
In pursuance to this, SEBI has notified amendments to SEBI (Portfolio Managers) Regulations, 1993 (PMS Regulations). These amendments provide a separate Chapter II-A for ‘Eligible Fund Managers’ and permit existing portfolio managers as well as new applicants, compliant with requirements specified under Section 9A of Income Tax Act, 1961, to act as ‘Eligible Fund Managers’.
Existing portfolio managers desirous of providing fund management services to overseas funds, if compliant with requirements specified in Section 9-A of Income Tax Act, 1961, may pursue this activity on intimation and submission of declarations to SEBI.
A new applicant desirous of providing fund management services to overseas funds, and compliant with the requirements specified in Section 9A of Income Tax Act, 1961, may seek registration with SEBI, as laid out in the Chapter II-A. Further, Chapter II-A also defines the obligations and responsibilities of such fund managers. Recognizing the different business requirements of such fund managers, as compared to the existing Portfolio Managers, SEBI has also identified certain provisions of the PMS Regulations which would not be applicable to Eligible Fund Managers pertaining to their activities as fund manager to Eligible Investment Funds. Some of the provisions are listed below:
1.High Water Mark Principle regarding calculation of fees, disclosure of fees;
2. Obligation to act in a fiduciary capacity;
3. Audit of overseas fund;
4. Entering into agreement between the portfolio manager and overseas fund;
5. Reporting requirements in respect of overseas fund;
6. Minimum investment requirements (i.e. INR 25 Lakhs), etc.
The amendments have been notified vide notification dated January 02, 2017. For any further information, Investment Management Department, Division of Funds-I may be contacted.
Securities and Exchange Board of India
[PR No. 2/2017]