Investment advisors (IAs) and research analysts (RAs) can charge their fees in advance for one year instead of three months earlier, the Securities and Exchange Board of India (Sebi) said in a circular.
Sebi has received a number of representations regarding the restrictions on advance fees. According to stakeholders, the three-month limitation disincentivises RAs and IAs from making long-term recommendations.
The market regulator considered the feedback and floated a consultation paper to increase the advance fee period for both IAs and RAs to one year.
Investment advisors and research analysts are expected to ensure compliance with the following fee-related provisions:
Advance Fee: Key points in Sebi’s circular
I. One year: If agreed by the client, IAs and RAs can charge advance fees. However, this advance should not be more than the fees for one year.
2. Set of investors: The fee-related provisions such as fee limit, modes of payment of fees, refund of fees, advance fee, and breakage fees will only be applicable in the case of individual and Hindu Undivided Family clients so long as these clients are not accredited investors.
These provisions will not apply to non-individual clients, accredited investors, and institutional investors seeking the recommendation of a proxy adviser.
3. Non-individuals: For non-individual clients, accredited investors, and institutional investors seeking a proxy adviser recommendation, fee-related terms and conditions will be governed through bilaterally negotiated contractual terms.
4. Implementation: The provisions of the circular came into effect on April 2, 2025.
5. Dissemination of message: The circular further states that the relevant authorities (IAASB/RAASB) are directed to bring the provisions of this circular to the attention of investment advisors and research analysts.
Those who want more details can access this circular on Sebi’s official portal at sebi.gov.in under the category Legal >> Circulars.
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