March 01, 2024
This blog provides an in-depth guide on SEBI’s reporting and disclosure requirements, including monthly and annual reporting, internal audits, performance disclosure, related-party transactions, and client grievance reporting.
Monthly Reporting to SEBI
Every SEBI-registered Portfolio Manager must submit a monthly report on PMS activities via the SEBI Intermediary Portal by the 7th working day of each month. The report is extensive and captures multiple aspects of PMS compliance, including:
I. Data for Discretionary Services
✔ AUM Breakup – Total discretionary AUM managed.
✔ Funds Inflow/Outflow – Deposits and withdrawals made by clients.
✔ Transaction Data – Details of all discretionary transactions.
✔ Performance Data – Investment returns compared to benchmarks.
II. Data for Non-Discretionary Services
✔ Client Categorization – High-net-worth individuals (HNIs), institutions, etc.
✔ AUM Breakup – Funds allocated to non-discretionary services.
✔ Funds Inflow/Outflow – Deposits and withdrawals recorded.
✔ Transaction Data – Trade execution details under non-discretionary mandates.
✔ Performance Data – Returns and comparison with market benchmarks.
III. Data for Advisory Services
✔ Client Base Breakdown – Number of advisory clients (domestic, foreign, institutional).
IV. Data for Co-Investment Services
✔ Client Base Breakdown – Number of clients under co-investment models.
✔ AUM Breakup – Funds allocated specifically for co-investment portfolios.
V. Data on Complaints
PMS must disclose investor complaints monthly, including pending complaints at the start, new complaints received, resolved cases, and pending cases at month-end, categorized by client type (domestic, corporate, foreign, etc.).
Annual Compliance Reporting
I. Internal Audit Requirements
SEBI mandates Portfolio Managers to conduct an internal audit, ensuring regulatory compliance and operational efficiency
Key Highlights of Internal Audit:
✔ Conducted by a practicing Chartered Accountant (CA) or Company Secretary (CS).
✔ Evaluates the quality of internal procedures and regulatory adherence.
✔ Report must be submitted to the Board of the Portfolio Manager.
✔ Ensures due diligence in all PMS operational activities.
✔ Submission deadline: The internal audit report must be submitted to the Board of the Portfolio Manager. Portfolio Managers must include compliance confirmation in their annual report to SEBI, ensuring submission within 30 days of the financial year-end.
II. Annual Reporting to SEBI
🔹 Certificate of Net Worth Compliance
✔ Issued by a Chartered Accountant.
✔ Must certify net worth as of March 31.
✔ Submission deadline: Within 6 months of financial year-end.
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🔹Annual Regulatory Compliance Report
✔ Signed by the Principal Officer.
✔ Details compliance with SEBI (Portfolio Managers) Regulations.
✔ Includes corrective actions for any past non-compliance issues.
✔ Submission deadline: Within 60 days of financial year-end.
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🔹Corporate Governance & Investor Protection Report
✔ PMS Boards must review regulatory compliance and investor grievances.
✔ Any SEBI warnings or deficiency letters must be tabled at Board meetings.
✔ The governance report must be submitted to SEBI within 30 days of financial year end.
Client Reporting Obligations
I. Quarterly Client Reports
Portfolio managers must send quarterly statements within 10 days from end of the quarter detailing:
✔ Portfolio Holdings & Asset Allocation.
✔ Investment Performance vs. Benchmarks (TWRR Method).
✔ Transaction details including Capital inflow & outflow from inception till end of reporting period, Investment during the reporting period, holding report as of end of quarter.
✔ Related-Party Investments & Associated Company Exposure.
✔ Details of Passive Breach of Investment Limits (if any).
✔ Credit Ratings of Debt & Hybrid Securities.
II. Fee Structure & Performance Benchmarking
PMS providers must disclose all fees upfront with an illustrative example of a ₹50 lakh portfolio over one year, comparing:
📈Scenario 1: Portfolio grows by 20%
📉 Scenario 2: Portfolio drops by 20%
📊 Scenario 3: Portfolio remains unchanged
Investor Transparency & Grievance Handling
I. SEBI’s Investor Charter Initiative
Portfolio managers must publish an “Investor Charter” on their website, covering:
✔ Rights & Obligations of Investors.
✔ Services Offered by the Portfolio Manager.
✔ Timeline for Account Opening & Reports.
✔ Grievance Redressal Process.
II. Public Complaints Disclosure
PMS providers must display monthly complaints data on their website, detailing:
✔ Total complaints received and resolved.
✔ Pending complaints older than 30 days.
✔ Nature of grievances (mis-selling, overcharging, etc.).
Disclaimer
For detailed reporting and disclosure requirements for PMS, please refer to SEBI’s official website (www.sebi.gov.in). This content is for informational purposes only and should not be considered legal advice.
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