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On 22nd August 2022, vide notification number SEBI/LAD-NRO/GN/2022/94, the Securities and Exchange Board of India (SEBI) issued a notification wherein SEBI made some amendments to Portfolio Managers Regulations vide the SEBI (Portfolio Managers) (Amendment) Regulations, 2022. The amendments have been brought to regulate the investments made by the portfolio managers of their clients in the securities of their related parties and their associates.
Portfolio managers are body corporates who enter into a contractual relationship with their clients to advise them, direct them, or undertake on their behalf the management or administration of their securities of goods or funds.
These amendments have been made in the existing Securities and Exchange Board of India (Portfolio Managers) Regulations, 2020. Following are the amendments:
SEBI has inserted a new clause (pa) after Regulation 2(1)(p). This new clause adds the concept of “related party” in relation to the portfolio manager, which includes the following parties within its ambit:
(A) A holding, associate or subsidiary company of the portfolio manager; or
(B) A subsidiary of a holding company to which the portfolio manager is a subsidiary;
(C) An investing company or the venture of the portfolio manager;
The Notification has also inserted a sub-regulation and two sub-clauses in Regulation 22(1A) and clauses (da) and (db) of Regulation 22(4). They are as follows:
The Notification has also inserted the following sub-regulations after Regulation 4(3):
The SEBI (Portfolio Managers) (Amendment) Regulations, 2022 have further added heads in the Model Disclosure Document for Portfolio management provided under Schedule V of the Regulations, 2020. These additional heads have been inserted after clause 14 of the schedule:
The SEBI (Portfolio Managers) (Amendment) Regulations, 2022 introduced by this Notification shall come into effect on the 30th day from the date of publication in the Official Gazette. Since the Notification came on 22nd August 2022, the enactment date of these amendments will be 21st September 2022.
The SEBI (Portfolio Managers) (Amendment) Regulations, 2022 have been introduced in the exercise of the powers conferred on SEBI under Section 11(1) and Section 12(1) of the SEBI Act, 1992[1] to promote the development and regulate the securities market and also to protect the investors’ interest in the securities market.
Read our Article: SEBI Rules on Portfolio Management System and Impact on Stakeholders
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