The Securities and Exchange Board of India (SEBI) has published an updated master circular for Investment Advisers, bringing all applicable SEBI circulars on the subject into a single consolidated set of directions and incorporating the provisions of the circulars listed in its appendix. With its issuance, the earlier circulars listed in the appendix are rescinded to the extent they relate to Investment Advisers, while prior actions, pending applications, liabilities, penalties and proceedings under the rescinded circulars are preserved under corresponding provisions. The consolidated framework reiterates key operational and conduct requirements, including client-level segregation of advisory and distribution activities within an Investment Adviser’s group or family using Permanent Account Number as the control record, mandatory client agreements incorporating standardized Most Important Terms and Conditions, and explicit client consent on every trade if implementation services are provided. It reflects the revised fee regime for individual and Hindu Undivided Family clients (other than accredited investors), including a fixed-fee cap of INR 151,000 per annum per family and an Assets under Advice cap of 2.5% per annum, permits fee-mode changes at any time (subject to the higher of the fixed-fee cap or 2.5% of AUA), allows advance fees up to one year with pro-rata refunds and breakage fees capped at one quarter, and sets a tiered deposit requirement from INR 100,000 to INR 1,000,000 based on the maximum number of clients in the prior financial year, to be maintained as lien in favour of the Investment Adviser Administration and Supervisory Body. Other compiled measures include bans on free trials and part payments, acceptance of fees only through traceable banking channels (no cash deposits), enhanced recordkeeping and annual compliance audits with specified disclosures, complaint-handling and transparency requirements aligned to SCORES and Online Dispute Resolution, disclosure and responsibility requirements where Artificial Intelligence tools are used, and processes for prior SEBI approval for change in control.
Securities & Exchange Board of India 2026-02-06
Securities and Exchange Board of India issues updated master circular consolidating requirements for investment advisers and rescinds prior circulars
SEBI has issued a consolidated master circular for Investment Advisers, integrating all relevant SEBI circulars and rescinding previous ones, while preserving prior actions and liabilities. Key updates include client-level segregation of advisory and distribution activities, a revised fee regime with caps, mandatory client agreements, enhanced compliance measures, and specific requirements for using Artificial Intelligence tools.