SEBI has approved a new rule allowing investment advisers and research analysts to collect one-year fees in advance, if agreed upon by the client. Previously, they were only permitted to charge advance fees for a maximum of two quarters for investment advisers and one quarter for research analysts.
This decision comes after complaints from research analysts that the earlier regulations, which were implemented in January, could potentially force them out of business. The Association of Registered Research Analysts of India has even requested SEBI to reconsider these guidelines.
Furthermore, SEBI clarified that the fee-related provisions, such as fee limits, modes of payment, refund policies, advance fees, and breakage fees, will only apply to individual and Hindu Undivided Family (HUF) clients who are not accredited investors. These rules do not extend to non-individual clients, accredited investors, or institutional investors seeking recommendations from a proxy adviser, as their fee terms will be determined through contractual agreements.
The SEBI Board meeting also addressed the issue of a cooling-off period for independent directors in Market Infrastructure Institutions (MIIs). It was decided that the existing process for the appointment of Permanent Identification Number (PIDs) would continue to require SEBI approval without the need for shareholder approval.
The new rule regarding advance fees for investment advisers and research analysts is set to provide relief to professionals in the industry, ensuring they can continue operations without facing financial constraints. The changes announced by SEBI aim to strike a balance between protecting investors and enabling businesses to thrive in the capital market.
