SEBI Registration for PMS License

For an individual with a hectic schedule or a newbie, investing in the share market is not an easy task. Investing in the share market requires a lot of research but not everyone is able to dedicate much time to do it. Especially if their profession requires them to be really busy. However, having a ‘busy life’ shouldn’t be a deterrent when it comes to making investments. 

Making investments is an important part of financial planning. Everyone should be able to make investments so that they can achieve their financial goals. This is why starting a company for providing Portfolio Management Services is a great idea in today’s time! By offering portfolio and management services, you can help many individuals to achieve their financial goals, so that they can plan their retirement, buy their dream house, etc. 

What is a SEBI PMS License?

The SEBI PMS license authorizes a business entity to provide services related to portfolio management. For those who want to provide portfolio management service in India, it is mandatory to obtain PMS License from SEBI.

Portfolio Management Service refers to a personalized investment service wherein a professional portfolio manager, authorized by SEBI, manages the investment of individuals and entities. A portfolio manager provides PMS investment services based on their client’s financial goals, risk appetite and expectations on the investment returns.

According to regulation 23 of SEBI (Portfolio Manager) Regulations 2020, the Portfolio Management Service providers are required to accept a minimum investment of Rs. 50 lakh from each client. By choosing to provide portfolio management services, you will have high net-worth individuals and ultra high net-worth individuals as your clients.

Services You Can Offer After Obtaining a PMS License

In total, there are four different PMS types.

Active Portfolio Management 

Active Portfolio management is a dynamic PMS investment approach which focuses on generating higher returns compared to a benchmark index like BSE Sensex or Nifty 50. It requires skilled stock portfolio managers who conduct in-depth research, market trend analysis and actively manage the investment portfolio with the aim of superior returns. The active portfolio management is opted by investors who have a higher risk appetite and seek higher capital gains.

Passive Portfolio Management 

Passive Portfolio Management, also called Index Investing, is a PMS investment strategy which involves replicating the performance of a market index like Nifty 50 instead of actively attempting to outperform the market. Passive portfolio managers construct and track portfolios that mirror the chosen index’s composition and weightings.

Discretionary Portfolio Management 

The client’s invested funds are managed independently by the portfolio manager in a Discretionary Portfolio Management. The portfolio manager learns about the investor’s financial goals and accordingly, manages the portfolio on behalf of the investor. They can purchase, sell and make changes to the PMS without obtaining explicit consent for each transaction which saves time for the investor.

Non-discretionary Portfolio Management 

Non-discretionary Portfolio Management is the complete opposite of discretionary portfolio management. It is a PMS investment approach which involves Portfolio Manager providing investment advice and recommendations to clients. However, the ultimate decision-making authority lies with the clients. In this kind of investment approach, the clients get complete control over their investment decisions and their explicit consent is mandatory for each transaction to take place. 

Eligibility Criteria for Portfolio Management License Registration

To be able offer portfolio management services, it is mandatory to obtain a PMS License from SEBI. To obtain this license, the applicant must meet the following eligibility criteria:

• The applicant must be a body corporate. 
• Minimum net-worth of Rs. 5 crores.
• The applicant entity must have at least 2 employees with a minimum experience of 5 years in stockbroking and fund or investment management
• The principal officer of the body corporate must possess any of the following qualifications:
  • Minimum 10 years of experience in activities related to portfolio management, securities market, stockbroker or fund management.
  • He shall be CFA institute’s CFA charter.
  • A professional degree/diploma in accountancy, law, finance, and business management from a recognized institution or university.

List of Documents required for PMS License

The applicant entity requires the following list of documents during the portfolio management services license process:

• Company Incorporation Certificate.
• Duly filled Form A
• PAN
• Details of Principal Officer’s qualifications.
• Memorandum of Association (MoA) and Articles of Association (AoA) of the applicant entity detailing its objectives.
• Any other relevant documents as may be required by SEBI

Procedure for Obtaining PMS License

The procedure for obtaining PMS license consists of the following steps:

Step 1: Filing an Application using Form A

In order to begin with the process for obtaining a PMS License, the applicant entity must file an application using Form A, for which the format is provided in Schedule I of SEBI regulations. The form must be filled without any errors to avoid cancellation or delay in the process.

Step 2: Payment of Application Fee

Now, once the application form is filled, an application fee of Rs. 1 lakh must be paid while submitting the application form. It must be credited to SEBI’s bank account directly, either through online transfer or a demand draft. The application fee is non-refundable.

Step 3: Examination of Application by SEBI

Once SEBI has received the application form, it will carefully review it. If the applicant meets the eligibility criteria and the board is satisfied with the application, the applicant will get an intimation regarding it.

Step 4: Grant of PMS License

Now, the applicant must pay the registration fee of Rs. 10 lakh for the grant of PMS license by SEBI.

Registrationwala’s Assistance in Obtaining PMS License

Registrationwala has assisted millions of clients for more than a decade now. We are trusted partners for various services. By choosing Registrationwala, you will get the support of our team leaders who have years of experience on their hands when it comes to assisting clients in obtaining a PMS license. 

Our PMS consultants will assist you throughout the entire process of obtaining the portfolio management services license, from helping you collect all the documents to filling out the application form and submitting it with the Securities and Exchange Board of India (SEBI.) We will ensure adherence to the regulatory requirements and keep you informed regarding the application status on a regular basis. By choosing Registrationwala, your PMS license process will be smooth and hassle-free. 

Frequently Asked Questions (FAQs) about Portfolio Management Services

Q1. What is the application fee and registration fee for portfolio management services?

A. The application fee and registration fee for portfolio management services are Rs. 1 lakh and Rs. 10 lakhs respectively.

Q2. Who regulates portfolio management services in India?

A. The Securities and Exchange Board of India (SEBI) regulates the PMS services in India.

Q3. How many types of PMS services are there in India?

A. There are 4 types of PMS services in India: Active Portfolio Management, Passive Portfolio Management, Discretionary Portfolio Management and Non-Discretionary Portfolio Management.

Q4. Is the income from PMS subject to taxation?

A. Yes, capital gains tax is applicable on income from PMS.