How to Open a SEBI Registered Portfolio Management Company

Posted on: 2018-01-11 03:49:14

A certain procedure needs to be followed in order to start a portfolio management company in India. First of all, you need to register it with SEBI (Securities and Exchange Board of India). The applicant needs to pay an application fee that amounts to INR 1 lakh and happens to be non refundable as well. The money has to be paid through a demand draft in favor of SEBI and the amount needs to be paid in Mumbai. The application contains a form – Form A – and the applicants need to provide some extra information with it as well.

This extra information can be found at the official website of SEBI – The applicants need to send the application at the address given below:

Head Office (HO) Address of SEBI at Mumbai, Maharashtra

Investment Management Department - Division of Funds- 1

Securities and Exchange Board of India

SEBI Bhavan, 3rd Floor A Wing,

Plot No. C4-A, ‘G’ Block,

Bandra-Kurla Complex,

Bandra (E), Mumbai - 400 051

Tel: +91-22-26449000 / 40459000

Fax: +91-22-26449019-22 / 40459019-22


Toll Free Investor Helpline: 1800 22 7575

This consumer helpline number is working through the Interactive Voice Response System (IVRS) technology as communication takes place through computerized voice of interaction.

If you are looking for any information relating to SEBI in your local regional office in Bangalore, then you can visit this address below:

SEBI Bengaluru Local Office, Karnataka

Securities and Exchange Board of India

2nd Floor, Jeevan Mangal Building,

No. 4, Residency Road, Bengaluru – 560025,

Karnataka, India

Tel: +91-080-22222262/ +91-080-22222264/ +91-080-22222283


Capital adequacy requirements and some other things to be kept in mind

In order to become a portfolio manager the net worth of an applicant should be at least INR 2 crore. It also needs to pay a registration fee of INR 10 lakh. This needs to be paid when SEBI grants it the certificate of registration.

The certificate is supposed to remain valid for a period of three years. The applicant would have to apply for renewal at around 3 months from the date of its expiry. Right now, the renewal fee is INR 5 lakh.

Laws regarding contracts between portfolio managers and clients

SEBI specifies that before a portfolio manager takes up any assignment to manage funds or a portfolio of securities as a representative of its client they both must enter a contract. This agreement has to be reached in writing. This agreement would define clearly the relationship that both of them would share.

It would also mention clearly their mutual rights, obligations, and liabilities that are connected to managing the portfolio of securities and funds. The Schedule IV of SEBI (Portfolio Managers) Regulations, 1993 mentions some details regarding such agreements and they have to be there in said agreement.

The fees

SEBI has not fixed any upper limit – or even any scale for that matter – as far as the fees to be charged by portfolio managers in India is concerned. However, the regulations also mention that the portfolio manager should charge the fee that has been specified in the contract between it and its client.

The fee could be anything – it could be a certain fee or a fee that is based on returns. Even a combination of both is allowed as well. The portfolio manager however needs to seek permission from the client before charging the fee. The portfolio manager may provide its service directly or indirectly. The term indirectly implies that it is outsourced to another similar entity. Even then, it can charge a fee for its work.

Value of funds and securities

As per the rules and regulations of SEBI, a portfolio manager in India would not be allowed to work with funds lesser than INR 5 lakh or securities whose value is lower than that particular figure. Also, a portfolio manager is not allowed to borrow money on behalf of its clients. It can only invest their money.

It also needs to be kept in mind that if an investor wants to put its money on listed securities then it would have to open one demat (dematerialization) account. The account also needs to be opened in its own name. A portfolio manager is also supposed to provide regular reports as agreed to in the contract reached with the client.