Description

SEBI amends Portfolio Manager regulations requiring disclosure documents before client agreements and removing Schedule-V.

Summary

SEBI has amended the Portfolio Managers Regulations, 2020 through notification SEBI/LAD-NRO/GN/2025/260. The key changes include mandatory provision of disclosure documents to clients before entering agreements and removal of Schedule-V from the regulations. These amendments come into effect from the date of publication in the Gazette.

Key Points

  • Amendment to Regulation 20: Reference to Schedule-IV replaced with “as per Schedule-IV”
  • Amendment to Regulation 22(3): Portfolio managers must now provide disclosure documents in Board-prescribed format along with Form-C certificate before client agreements
  • Schedule-V has been completely removed from the regulations
  • Amendments effective from September 2, 2025 (gazette publication date)

Regulatory Changes

Regulation 20 Amendment: The clause (xi) now specifically refers to “as per Schedule-IV” for compliance requirements.

Regulation 22(3) Amendment: Portfolio managers must provide clients with:

  • Disclosure documents in SEBI-prescribed format
  • Certificate as per Form-C from Schedule-I
  • Both documents must be provided before entering into client agreements

Schedule Modification: Complete removal of Schedule-V from the regulatory framework.

Compliance Requirements

  • Portfolio managers must update their client onboarding processes
  • Disclosure documents must be prepared in SEBI-prescribed format
  • Form-C certificates from Schedule-I must be provided to all new clients
  • Existing processes need to be reviewed to ensure compliance with amended disclosure requirements
  • Documentation procedures must be updated to reflect removal of Schedule-V references

Important Dates

  • Effective Date: September 2, 2025 (date of gazette publication)
  • Compliance Timeline: Immediate compliance required for all new client agreements post-effective date

Impact Assessment

Operational Impact: Portfolio managers need to revise their client onboarding procedures to incorporate mandatory disclosure document provision. This may require updates to existing documentation templates and processes.

Compliance Impact: Enhanced transparency requirements through mandatory disclosure documents strengthen investor protection. The removal of Schedule-V simplifies the regulatory framework while maintaining essential compliance standards.

Market Impact: Minimal direct market impact expected as changes are primarily procedural, focusing on improving client disclosure standards rather than altering investment management practices.

Impact Justification

Procedural changes for portfolio managers affecting disclosure requirements but not fundamentally altering operations