INSUBCONTINENT EXCLUSIVE:
Under the PMS Regulations, no upfront fees will be charged by the portfolio managersCapital markets regulator Sebi on Friday came out with
the procedure for undertaking co-investment services through portfolio management route.This comes after Sebi last month amended rules
pertaining to portfolio managers to facilitate co-investment by investors of Alternative Investment Funds (AIF) through the portfolio
management route.In a circular, the regulator said that a manager of an AIF who is also a registered portfolio manager, and intends to offer
co-investment services through portfolio management route, will do so only after prior intimation to Sebi.It, further, said any other
manager who is not a registered portfolio manager, and wishes to offer co-investment services through portfolio management route, will have
to seek registration from Sebi as a portfolio manager.Pursuant to grant of registration, if such portfolio manager is desirous of offering
portfolio management services (PMS) other than co-investment, the same will be subject to compliance with all provisions of the PMS rules
including eligibility criteria, and with the prior clearance of Sebi.With regard to periodic reporting, the regulator said that portfolio
managers will have to submit a monthly report regarding their portfolio management activity, on intermediaries portal within seven working
days of the end of each month.This needs to be submitted as per the revised format, which includes details of co-investment offered by
Further, portfolio managers will have to furnish a report to their clients on a quarterly basis, as per the revised format which includes
details of co-investment offered by portfolio manager.The reporting requirements under the revised formats will be applicable for monthly
reports to Sebi and quarterly reports to clients, from April 2022 onwards
The regulator clarified that the provisions with respect to fees and charges as well as direct on-boarding of clients by portfolio managers
specified under PMS rules will not be applicable to co-investment services.These provisions will remain unchanged for portfolio management
services other than co-investment, it added
Under the PMS Regulations, no upfront fees will be charged by the portfolio managers, either directly or indirectly, to the clients.Also,
operating expenses excluding brokerage, over and above the fees charged for portfolio management service, will not exceed 0.50 per cent per
annum of the client's average daily assets under management (AUM)
According to rules, a the time of on-boarding of clients directly, no charges except statutory charges will be levied.
