tag:blogger.com,1999:blog-3202774368551476669.post2269076642137604835..comments2023-09-15T16:21:31.980+05:30Comments on INDIAN CORPORATE LAW: SEBI Investment Advisers Regulations – an overkill?Umakanth Varottilhttp://www.blogger.com/profile/12438677982004444359noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-3202774368551476669.post-81298571213813310852013-11-01T11:30:34.796+05:302013-11-01T11:30:34.796+05:30Dear Sir,
My name is Shashank, and I am Mechanica...Dear Sir,<br /><br />My name is Shashank, and I am Mechanical Engineer with 10 years of Experience. Stock market trading has been my passion, I have been trading for the past 8+ years. After facing initial hurdles, I have been trading profitably for the last 3 years. Now, I want to leave my day job and become a full time trader.<br /><br />As you must be knowing, in trading, we don't get a regular income. Income generally comes in bursts. So, to get steady income, I was also thinking of opening a subscription based service for trading advice, only on Nifty Futures. I already have many followers on trading forums, who are willing to subscribe to me.<br /><br />Can you please guide me as to how you obtained the Investment Adviser Certificate from SEBI?<br /><br />Further, since I will be giving advice only on Nifty Futures, am I exempt from taking a certificate, as per the following clause: "(a) Any person who gives general comments in good faith in regard to trends in the financial or securities market or the economic situation where such comments do not specify any particular securities or investment product;".<br /><br />Finally, if I don't get the certificate from SEBI, on eligibility ground etc., does it mean that I cannot run such a subscription based service or is there any rule under which I can be exempt from registering as an investment adviser?<br />Shashanktraderhttps://www.blogger.com/profile/15643636805425219839noreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-43906239674928879992013-02-21T15:08:54.248+05:302013-02-21T15:08:54.248+05:30@Anonymous...
This is partly also because the cor...@Anonymous...<br /><br />This is partly also because the corporate form is not registered and regulated by the respective body (ICAI, ICSI, etc.). Also, the company may change the persons in charge from professionals like CA/CS/lawyer to non-professionals. Since this cannot be controlled, the corporate body as a whole would need to be registered and regulated. This seems to be the intention as far as I can gather.CA Jayant Thakurhttps://www.blogger.com/profile/06755740172092808729noreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-13000582138221730342013-02-20T13:14:10.889+05:302013-02-20T13:14:10.889+05:30I see. But would that actually be the intention of...I see. But would that actually be the intention of the legislator? I mean, if lawyers can provide the same advice they are exempted, if CA and CS provide the same advice as a part of the transaction, then also they are free. But as soon such professionals render the service under the cover of company form of businesss, they are required to be complied with?<br /><br /><br />To illustrate more, a law firm advises ABC limited to use, say a combination of debt/ equity instrument, to make an investment in PQR. This doesn't come under the ambit of the IA reg. If the same advice is given by practicing CA or CS, then also it is fine. But the moment such professinals render the same advice through a company form of business, they are immediately required to be goverened as per the IA reg?! Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-88785824038388716782013-02-20T10:29:31.327+05:302013-02-20T10:29:31.327+05:30@Anonymous...
Acting as Investment Adviser throug...@Anonymous...<br /><br />Acting as Investment Adviser through a corporate body would attract registration even if, in a practice sense, main or sole operating person is a CA/CS. In fact, it would attract stricter requirements such as higher net worth requirements. Moreover, even the CA/CS himself who acts as representative of the company would need certification, etc. CA Jayant Thakurhttps://www.blogger.com/profile/06755740172092808729noreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-28937747753525429312013-02-19T17:24:35.611+05:302013-02-19T17:24:35.611+05:30@Anand Raja and Jayant Thakur,
What's about ...@Anand Raja and Jayant Thakur, <br /><br />What's about CA and CS (who although are under the guidance of their respective professional bodies ICAI and ICSI) who renders investment advice through a body corporate, like small CS who forms a co with few other CS or accounting/ tax firms who render services through company form of business (classic eg being Big 4'S). Although inidvidually they may be goverend by ICAI and ICSI reg but when they come under a company form of business they may not. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-40595564502045403542013-02-19T12:42:28.909+05:302013-02-19T12:42:28.909+05:30@ Anand Raja
As mentioned in my post - "Insu...@ Anand Raja<br /><br />As mentioned in my post - "Insurance brokers/agents registered with IRDA are excluded, provided they offer advice solely in investment products." So, indeed, apart from other conditions, insurance agents/brokers need to be registered with IRDA for availing of exemption.<br /><br />CAs, CSs, etc. are of course already registered with their respective professional bodies.<br /><br />It is also true that the intention appears to be that even exempted category of investment advisors should follow applicable regulations like documentation, etc. Unfortunately, in the wording of the Regulation, this aspect is ambiguous. Even otherwise, the regulations that apply only to registered investment advisers and those that apply to all investment advisers are not clearly bifurcated.CA Jayant Thakurhttps://www.blogger.com/profile/06755740172092808729noreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-78727960348086956142013-02-19T00:53:33.683+05:302013-02-19T00:53:33.683+05:30You are incorrect when you say that insurance agen...You are incorrect when you say that insurance agents and CAs, etc are exempted under the regulations. I spoke with a gentleman at SEBI and asked him this question specifically. His response was that these persons are only exempt from registration because SEBI believes they are must be registered under some other body of the government. They need not register but definitely have to comply with the provisions of the regulations.Anand Rajanoreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-40401017683463799672013-01-28T16:54:07.713+05:302013-01-28T16:54:07.713+05:30How SEBI will ensure all Advisers (confined to Sha...How SEBI will ensure all Advisers (confined to Shares & Stocks) are registered with it and how it can take action on those not registered and offering Investment Advise ? <br />The Regulation does not give power to SEBI to penalise those who offer advise for a consideration by whatever name it is called.Ujalakinoreply@blogger.comtag:blogger.com,1999:blog-3202774368551476669.post-79210049367324885092013-01-26T09:12:23.225+05:302013-01-26T09:12:23.225+05:30“The term investment advice has been defined to co...“The term investment advice has been defined to cover advice relating to securities and investment products. This covers a very wide range of products. Investment products may also cover even real estate, gold, etc., i.e., non-financial products.”<br />On these limited observations, wish to share a few more thoughts:<br />If the term ‘investment products ‘ were to be so liberally construed, that will mean, SEBI would be within its powers to try and overreach all and sundry, - including any non-financial product - regardless of whether or not it has the characteristics of the shares or stocks. What ought not to be forgotten is that, SEBI’s powers, in terms of the special statute of which it is a creature, are confined to regulating exclusively the market for the said financial products. In this context, one has to remember the ego war between SEBI and IRDA that raged the economic scenario not long ago. The worrisome controversy, though was eventually given a quietus, was hotly debated; for knowing more, besides the other material in public domain, the article @ http://www.taxguru.in/sebi/sebi-v-irda-%E2%80%93-unfolding-turf-war.html may be read.<br /><br />Nonetheless, in reality,the stock market, has, by its very nature, always been , and remained to be, vulnerable to, and many times widely impacted /impaired by so many other extraneous factors or considerations; that is, whether or not related directly or indirectly to ‘stock’.<br />vswaminoreply@blogger.com