Floor size of portfolio for managers raised

MUMBAI, January 29, 2012

Portfolio managers will henceforth need to have a minimum portfolio size of Rs 25lakh per client. The Securities and Exchange Board of India (SEBI) on Saturday decided to enhance the minimum investment amount per client managed by portfolio managers to Rs.25 lakh from Rs.5 lakh at present by amending the SEBI (Portfolio Managers) Regulations, 1993.



The proposed amendment will ensure segregation of holdings in individual demat accounts in respect of unlisted securities. It will be applicable on a prospective basis for new clients and for fresh investments by existing clients, the regulator said in a press release after its board meeting in New Delhi.



The regulator also decided to exempt insurance companies and mutual funds, which are broad-based investment vehicles representing the interests of the public at large, from the provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulations, relating to sale and lock-in of their pre-preferential shareholding in the issuer company.



At present, SEBI (ICDR) Regulations preclude companies from issuing preferential allotment to entities which have sold any of their holdings during the six months prior to the relevant date.







The board, in order to provide for fair valuation of securities/assets of mutual fund schemes, also approved changes in the SEBI (Mutual Fund) Regulations, 1996, which ask the asset management companies (AMCs) to ensure a fair treatment to all investors, that is, to existing investors as well as to investors seeking to purchase or redeem units of mutual funds at all point of time in all schemes. In case debt and money market securities are not traded on a particular valuation day, then the valuation through the amortisation basis shall be restricted to securities having residual maturity of up to 60 days (at present 91 days), provided such valuation shall be reflective of the realisable value/fair value of the securities, said SEBI.



While amending the mutual fund regulations relating to its advertisement code, SEBI said that AMCs would be responsible for the accuracy, truthfulness and fairness of the advertisement.



The definition of advertisement also broadened to include all forms of communication that may influence investment decisions of any investor.



On the issue of reservation to convertible debt holders in rights/bonus issues, it has been decided to clarify that reservation shall be available only to compulsorily convertible debt holders, since conversion in such cases is not at the option of the holders of these instruments.



Portfolio managers will henceforth need to have a minimum portfolio size of Rs 25lakh per client. The Securities and Exchange Board of India (SEBI) on Saturday decided to enhance the minimum investment amount per client managed by portfolio managers to Rs.25 lakh from Rs.5 lakh at present by amending the SEBI (Portfolio Managers) Regulations, 1993.



The proposed amendment will ensure segregation of holdings in individual demat accounts in respect of unlisted securities. It will be applicable on a prospective basis for new clients and for fresh investments by existing clients, the regulator said in a press release after its board meeting in New Delhi.



The regulator also decided to exempt insurance companies and mutual funds, which are broad-based investment vehicles representing the interests of the public at large, from the provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulations, relating to sale and lock-in of their pre-preferential shareholding in the issuer company.



At present, SEBI (ICDR) Regulations preclude companies from issuing preferential allotment to entities which have sold any of their holdings during the six months prior to the relevant date.



Further, the allottees in the preferential allotment are required to lock-in their entire pre-preferential holdings for six months from the date of the allotment.



The lock-in on shares allotted in the preferential issue, however, will remain unchanged.



The board, in order to provide for fair valuation of securities/assets of mutual fund schemes, also approved changes in the SEBI (Mutual Fund) Regulations, 1996, which ask the asset management companies (AMCs) to ensure a fair treatment to all investors, that is, to existing investors as well as to investors seeking to purchase or redeem units of mutual funds at all point of time in all schemes. In case debt and money market securities are not traded on a particular valuation day, then the valuation through the amortisation basis shall be restricted to securities having residual maturity of up to 60 days (at present 91 days), provided such valuation shall be reflective of the realisable value/fair value of the securities, said SEBI.



While amending the mutual fund regulations relating to its advertisement code, SEBI said that AMCs would be responsible for the accuracy, truthfulness and fairness of the advertisement.



The definition of advertisement also broadened to include all forms of communication that may influence investment decisions of any investor.



On the issue of reservation to convertible debt holders in rights/bonus issues, it has been decided to clarify that reservation shall be available only to compulsorily convertible debt holders, since conversion in such cases is not at the option of the holders of these instruments.


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