Sebi proposes increase in minimum net worth of portfolio managers to Rs 5 cr

Markets regulator Sebi on Friday came out with a consultation paper to amend portfolio managers' norms, including the proposal to increase minimum net worth requirement of a portfolio manager to Rs 5 crore from the current Rs 2 crore.

Sebi also proposed to raise the minimum investment amount to Rs 50 lakh from Rs 25 lakh.

The proposals floated by Sebi are based on recommendations of the working group that has proposed changes in the Sebi (Portfolio Managers) Regulations, 1993.

While making recommendations on a range of issues pertaining to portfolio managers, the working group proposed to amend definition of principal officer besides enhancing the minimum educational qualification requirements.

According to the recommendations, portfolio managers may be permitted to invest only in listed securities (equity, debt or commodity derivatives) and units of mutual funds, on behalf of their clients. Currently, no such restrictions exist.

Periodic reports should be furnished to clients at least once in 3 months instead of 6 months.

Regarding disclosure document, it has been proposed that information on conflicts of interest related to services offered by group companies of the portfolio manager be compulsorily captured while disclosure on commission paid to distributor may also be included.

Additionally, the working group has also made recommendations on performance reporting by portfolio managers, reporting and disclosure requirements of portfolio managers and rationalisation of fees and expenses, among others.

The comments from public have been sought by August 30.