RIGHTS AND OBLIGATIONS OF INVESTMENT ADVISER AND CLIENTS

RIGHTS AND OBLIGATIONS OF INVESTMENT ADVISER AND CLIENTS

as prescribed by SEBI - Securities Exchange Board of India

  • The client shall seek advice as defined in the Rules, Byelaws and Regulations of Securities Exchange Board of India (SEBI) and circulars / notices issued there under from time to time.
  • The Registered Investment Adviser (RIA) and the client shall be bound by all Rules, Byelaws and Regulations of Securities Exchange Board of India (SEBI) and relevant notifications of Government authorities as may be enforce from time to time.
  • The client shall satisfy itself of the capacity of the RIA to deal in advice and wishes to execute its orders if any and the client shall from time to time continue to satisfy itself of such capability of the RIA.
  • The RIA shall continuously satisfy itself about the genuineness and financial soundness of the client and investment objectives relevant to the services to be provided.
  • The RIA shall take steps to make the client aware of the precise nature of the RIA’s liability for business to be conducted, including any limitations, the liability and the capacity in which the RIA acts.
  • Other treatments through non-allopathic methods are not paid for by most insurers.

Client Information

  • The client shall furnish all such details in full as required by the RIA with supporting details, made mandatory by SEBI from time to time.
  • The client shall familiarize himself with all mandatory provisions in the agreement documents. Any additional clauses or documents specified by the RIA shall be non – mandatory, as per terms and conditions accepted by the client.
  • The client shall immediately notify the RIA in writing if there is any change in the information in the agreement / information form as provided at the time of initiating the relationship and thereafter; including the information on winding up petition/ insolvency petition or any litigation which may have material bearing on his capacity. The client shall provide / update the financial information to the RIA on a periodic basis.
  • The RIA shall maintain all the details of the client as mentioned in the agreement / information form or any other information pertaining to the client, confidentially and that they shall not disclose the same to any person / authority except as required under any law / regulatory requirements. Provided however that the RIA may so disclose information about his client to any person or authority with the express permission of the client.

Fee and Charges

  • The client shall pay applicable fee, charges as are considered necessary by the RIA or as may be directed by SEBI from time to time as applicable to the services provided. The RIA is permitted in its sole and absolute discretion to collect reimbursement of cost incurred / out of pocket expenses (even though not required by SEBI) and client shall be obliged to pay such amounts within the stipulated time
  • The client understands the payment of fee, charges by the client does not necessarily imply complete satisfaction of all dues. In spite of continuously having paid fee, the client may on the settlement be obliged to pay (or entitled to receive) such further sums as the agreement may dictate / required.

GENERAL OBLIGATIONS OF THE INVESTMENT ADVISER AND CLIENT:

  • i. The investment adviser shall act in a fiduciary capacity towards its clients and shall disclose all conflicts of interests as and when they arise;
  • ii. The investment adviser shall provide suitable investment advice to the client which is in best interest of the client after assessing risk profile of the client;
  • iii. The investment adviser shall disclose the following information / details to the client before accepting advisory fee from the client:
    • a) Scope of services to be provided by the investment adviser subject to the activities permitted under IA Regulations;
    • b) Type of instruments for which advices is proposed to be provided;
    • c) Tenure of the services;
    • d) Fees payable to the investment adviser and the quantum and manner thereof;
    • e) Disclosure on performance fee, if any;
    • f) Risks involved;
    • g) Liabilities and obligations relating to advisory services;
    • h) Disciplinary history;
    • i) Settlement of grievances / disputes and provision for arbitration;
    • j) Any other information relevant to IA Regulations;
  • iv. The investment adviser shall clearly and concisely state the terms and conditions of investment advisory services being provided for easy understanding of the potential client.
  • v. The investment adviser shall charge an agreed fee from the clients for rendering investment advisory services without guaranteeing or assuring, either directly or indirectly, any return.
  • vi. The ‘Rights and Obligations” document shall contain the following risk factors:
    • a) Investment in securities are subject to market risks and there is no assurance or guarantee that the objective of the investments will be achieved.
    • b) Past performance of the investment adviser does not indicate its future performance
  • vii. The investment adviser shall obtain an acknowledgement from the client that he has read and understood the terms and conditions of the advisory services and fee structure.
  • viii. The investment adviser shall not receive any consideration by way of remuneration or compensation or any other form from any person other than client being advised in respect of the underlined investment products or securities which includes all financial instruments. However, under the existing framework corporate entities registered as RIAcan offer execution or distribution services subject to the condition that the investment advisory services are offered through separate identifiable division or department. RIAs are getting the commissions from the fund houses I;e AMCs and additionally can also charge execution / advisory fee to the client.
  • ix. The investment adviser shall be allowed to receive trail commission for the products already distributed subject to disclosures to the clients.
  • x. The client shall not be under any obligation to avail the distribution or execution services offered by the investment adviser.
  • xi. The RIA shall not organize or offer any scheme / competition / game / league on securities or related to securities market.
  • xii. The RIA shall ensure that the fees charges to the client is fair and reasonable and RIA shall accept fees strictly by Account payee / Crossed cheque or Demand draft or by way of direct credit into the bank account through NEFT / RTGS / IMPS or any other mode allowed by RBI.
  • xiii. Investors either directly or with the help of RIA can take an informed decision whether the recommendations given by RIA are suitable for his / her risk profile.
  • xiv. The responsibility to choose the appropriate package lies with the client.

DISPUTE RESOLUTION

  • The investment adviser shall provide the client with relevant contact details of the designated person who is responsible for dispute resolution including the name, number and email ID.
  • Details of the SCORES URL may also be provided for lodging complaint with SEBI.
  • The investment adviser shall co-operate in redressing grievances of the client in respect of advisory services.
  • The client and the investment adviser shall refer nay claims and / or disputes, to arbitration in accordance with the Arbitration and Conciliation Act, 1996.

DISPUTE RESOLUTION

  • The investment adviser shall provide the client with relevant contact details of the designated person who is responsible for dispute resolution including the name, number and email ID.
  • Details of the SCORES URL may also be provided for lodging complaint with SEBI.
  • The investment adviser shall co-operate in redressing grievances of the client in respect of advisory services.
  • The client and the investment adviser shall refer nay claims and / or disputes, to arbitration in accordance with the Arbitration and Conciliation Act, 1996.

TERMINATION OF RELATIONSHIP

  • i. Relationship between the Investment Adviser and the client shall be terminated if the registration as an investment adviser is cancelled by SEBI for any reason including voluntary surrender of registration, death, expulsion etc.
  • ii. The investment adviser and the client shall be entitled to terminate the relationship between them after giving notice in writing of not less than one month to the other party. Notwithstanding any such termination, all rights, liabilities and obligations of the parties arising out of or in respect of transactions entered prior to the termination of this relationship shall continue to subsist and vest in / be binding on the respective parties or his / her / its respective heirs , executors, administrators, legal representatives or successors, as the case may be.
  • iii. In case the clients are not satisfied with the services being provided by the investor adviser and want to terminate / stop the advisory services or the investment adviser is unable to provide the advisory services, either party shall have a right to terminate the advisory relationship at any time subject to refund of the proportionate advisory fee.

ELECTRONIC REPORT NOTES

In case client opts to receive the reports in electronic form, he shall provide an appropriate email ID to the RIA. The client shall communicate to the RIA any change in the email-id through a physical letter. If the client has opted for online transactions, the request for change of email id may be made through the secured access by way of client specific user id and password.

The client shall note that non-receipt of bounced mail notification by the RIA shall amount to delivery of the reports at the email lid of the client.

The RIA shall retain report and acknowledgment of the mail in a soft and non-tamperable form in the manner prescribed by SEBI in compliance with the provision of the IT Act, 2000 and as per the extant rules / regulations / circulars / guidelines issued by SEBI from time to time. The proof of delivery i.e., report generated by the system at the time of sending the report shall be maintained by RIA for the specified period under the extant regulations SEBI. The report shall provide the details of the transactions that are not executed / email rejected or bounced. Back. The RIA shall take all possible steps to ensure receipt of notification of bounced mails by him at all times within the stipulated time period under the extant regulations of SEBI.

The RIA shall continue to send reports in the physical mode to such clients who do not opt to receive the reports in the electronic form. Wherever the reports have not been delivered to the client or has been rejected (bouncing of mails) by the email ID of the client, the RIA shall send a physical report to the client within the time under the extant regulations of SEBI and maintain the proof of delivery of such reports.

In addition to the email communication of the reports to the client, the RIA shall simultaneously publish the report on his designated APP, if any, in a secured way and enable relevant access to the clients and for this purpose, shall allot a unique user name and a password to the client, with an option to the client to save the report electronically and / or take a print out of the same.

LAW AND JUSRISDICTION

In addition to the specific rights set out in this document the RIA and the client shall be entitled to exercise any other rights which the RIA or the client may have under the Rules, By-laws and Regulation of SEBI in which the client chooses ss to and transact and circulars / notices issued thereunder or Rules and Regulations of SEBI.

The provisions of this document shall always be subject to Government notifications, any rules, regulations, guidelines and circulars / notices issued by SEBI and Rules, Regulations and Bye laws of the relevant platforms, where the transactions is executed, that may be in fore from time to time.

The RIA and the client shall abide by any award passed by the Arbitrator(s) under the Arbitration and Conciliation Act, 196. However there is also a provision of appeal within SEBI, if either party is not satisfied with the arbitration award.

Words and expressions which are used in this document but which are not defined herein shall, unless the context otherwise requires, have the same meaning as assigned thereto in the Rules, Bylaws and Regulations and circulars / notices issued thereunder of SEBI.

All additional voluntary clauses / document added bythe RI A should not be in contravention with rules / regulations / notices / circulars of SSEBI. Any changes in such voluntary clauses / documents(s) need to be preceded by a notice of 15 days. Any changes in the rights and obligations which are specified by SEBI shall also be brought to thenotice of the clients.

If the rights and obligations of the parties hereto are altered by virtue of change in Rules and Regulations of SEBI where the transaction is executed, such changes shall be deemed to have been incorporated herein modification of the rights and obligations of the parties mentioned in this document.