There are couple of my clients who were using distribution services earlier (from the Pvt Ltd Company) and have not exited some investments (in Regular Mode) for various reasons like tax etc. No fees is being charged to them on Regular Mode assets. It’s also been mentioned in the Client Agreement.
All new investments/switches have been made in Direct Mode only, which will be continued in the future too. Clients are now being advised only by me (Individual RIA) now.
- What are the possible areas of conflict?
- Is it advisable to change to a Corporate RIA with SIDD?
If we wish to convert to a Corporate RIA, do we get a waiver for MBA in Finance for three years (I have completed a one year Executive Program from Indian Institute of Management and also a Diploma in Finance – but not a two year program) to complete the same? I have started a two year MBA Finance program already. We meet all other requirements for the Corporate RIA license.
Response to Sub-Query-1:
In our opinion, as per the interpretation of law, especially Regulation 22 of IA Regulations, there is no conflict in your case.
- As an Individual RIA you are not providing distribution services.
- Also, your family (adviser, spouse, children and parents) is not directly providing distribution services.
Note: It is the Pvt. Ltd. company which is providing distribution services, not the family member as defined in Regulation 2(1)(gc) of IA Regulations.
Response to Sub-Query-2:
In our opinion, it is not advisable to convert into corporate RIA, as there is no problem in current arrangement.
Response to Sub-Query-3:
As a qualification requirement for Principal Officer of Non-Individual RIA — a professional qualification or post-graduate degree or post graduate diploma (minimum two years in duration) in finance – will suffice.
Additionally such Principal officer have to satisfy the following experience and certifications:
- An experience of at least five years in activities relating to advice in financial products or securities or fund or asset or portfolio management.
- A certification on financial planning or fund or asset or portfolio management or investment advisory services from National Institute of Securities Markets (NISM) or from any other organization or institution including Financial Planning Standards Board of India (FPSB) or any recognized stock exchange in India provided such certification is accredited by NISM.
Information contained in the responses / answers to the queries posted to ARIA, and related notes / discussion / documents / guidelines / interpretations / publication provided in connection to such responses to queries, are intended for use, primarily by the relevant queryist and generally for members of ARIA only, to the extent suitable to their situation / case. If you are not the intended audience of these query-response artefacts, an agent of the intended audience or a person responsible for delivering the information to the named entities, you are notified that any use, distribution, transmission, printing, copying or dissemination of this information in any way or in any manner is strictly prohibited.
Every effort has been made to avoid errors or omissions in these query-response artefacts. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice at firstname.lastname@example.org (more contact details at https://aria.org.in) which shall be taken care of in the next update and release.
Though, we may provide, to the best extent possible, a reasonably proper response to the query, there may be, alternative answers / approaches / interpretations / improvisation possible.
It is notified that neither ARIA nor the authors, including, members of Sanjay Kadel & Co. Chartered Accountants, or anyone connected herewith will be responsible for any damage or loss of action to any one, of any kind, in any manner, therefrom. It is suggested that to avoid any doubt the reader should cross-check all the facts, law and contents of the publication with original Government publication or notifications.