Q.17 : Wanted to understand in case of blood relative of existing client like wife , mother ,father and HUF investments looking at investment advice can we

 -Update their name in existing LOE of client and take KYC & risk tolerance as required or separate onboarding as client needs to be done.

Response:

Firstly, let us be clear on the ‘Family of client’ definition.

According to Regulation 2(gb) of the IA Regulations:

“Family of client” shall include individual client, dependent spouse, dependent children and dependent parents;

Just because of blood relation, the family members do not form part of “family”. The word “dependent” is to checked.

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According to 2(i)(g) of the IA Guidelines:

The dependent family members shall be those members whose assets on which investment advisory is sought/provided, originate from income of a single entity i.e. earning individual client in the family. The client shall provide an annual declaration or periodic updation as the case maybe in respect of such dependent family members.

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According to 2(i)(f) of the IA Guidelines:

In case of an individual client, “family of client” shall be reckoned as a single client and PAN of all members in “family of client” would jointly and severally be the control record. However, the same is not applicable for non-individual clients.

According to 2(i)(e) of the IA Guidelines:

PAN of each client shall be the control record for identification and client level segregation.

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To conclude:

1. HUF will have to be treated as separate client.
2. If the family members who are depended on the original individual client, are joining, then they can be made as part of LOE of the original individual client.
3. If any of the family members are not depended, then onboard as separate client.

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