PMS Registration with SEBI — Portfolio Manager Licence
Managing other people’s money in securities for a fee needs a portfolio manager certificate from SEBI under the SEBI (Portfolio Managers) Regulations, 2020. The applicant must be a body corporate with a net worth of at least ₹5 crore, and each client must invest at least ₹50 lakh. We set up the entity and the Form A application, then handle compliance once you are live.
What it is
A portfolio manager is a body corporate that, under a contract with a client, manages or advises on a portfolio of securities, funds or goods for that client. Unlike a mutual fund, each client’s money sits in that client’s own account. That is what a portfolio management service (PMS) sells: a portfolio built around one client.
Regulation 3 of the SEBI (Portfolio Managers) Regulations, 2020 says no person shall act as a portfolio manager without a certificate of registration from SEBI. The application goes in Form A on the SEBI Intermediary (SI) portal with a non-refundable application fee of ₹1,00,000.
There are two main ways to run a PMS. In a discretionary service, the portfolio manager decides what to buy and sell for each client. In a non-discretionary service, the manager acts on the client’s directions.
Who it applies to
Fund managers starting their own firm
Equity or debt managers who want to run client money under their own brand need an eligible company or LLP and the SEBI certificate.
Brokers and wealth firms adding PMS
Brokers and wealth managers who want to manage portfolios, not just execute trades, must register separately.
Family offices managing outside money
Picture a Faridabad business family whose investment team starts managing money for two other families, for a fee. That is portfolio management, and it needs registration.
Why it matters
It is the only legal way to run a PMS
Managing client portfolios for a fee without a certificate breaches Regulation 3. Serious clients check SEBI’s list of registered portfolio managers before they sign.
It gives clients a safety net
Client money sits in a separate bank account and securities stay with a custodian. Complaints can go to SEBI through SCORES.
It lets you earn on performance
You can charge a fixed fee, a performance fee or both, as the client agreement says. Performance fees follow the high-watermark principle.
Eligibility at a glance
| Requirement | What SEBI asks for | Rule |
|---|---|---|
| Legal form | A body corporate (a company or an LLP) | Regulation 7(2)(a) |
| Net worth | Not less than ₹5 crore | Regulation 9 |
| Principal officer | Professional qualification in finance, law, accountancy or business management, or a CFA charter; at least 5 years in the securities market, of which at least 2 years in portfolio management, investment advisory or fund management; relevant NISM certification | Regulation 7(2)(d) |
| Second key employee | At least one more employee who is a graduate with 2 years of related experience | Regulation 7(2)(e) |
| Compliance officer | A separate compliance officer must be appointed | Regulations 7(2)(c) and 34 |
| Infrastructure | Adequate office space, equipment and manpower | Regulation 7(2)(b) |
Here is the catch most first-time applicants miss. The ₹5 crore is net worth, not paid-up capital or bank balance alone. Accumulated losses and deferred expenditure not yet written off reduce it, and revaluation reserves do not count, so we compute it on your audited balance sheet first and arrange a chartered accountant’s net worth certificate.
Documents required
About the applicant
- Certificate of incorporation, MOA and AOA
- PAN, and directors’ or partners’ DIN/DPIN
- Shareholding pattern, promoters and group entities
- Latest audited financial statements
About the people
- CVs, degrees, experience letters and NISM certificates of the principal officer and key employee
- Appointment letter of the compliance officer
- Fit-and-proper declarations of directors and key persons
About the business
- Net worth certificate from a chartered accountant
- Proof of office premises and details of infrastructure
- Draft disclosure document, client agreement and policies
How it works
Test your team and net worth against Regulation 7
Say you spent eight years as a fund manager at a broking house and now want your own PMS. We map your CV to the principal officer criteria, test the net worth and, if needed, incorporate a private limited company with suitable objects.
Put the people and capital in place
The principal officer and key employee clear NISM certification. You appoint a compliance officer and bring net worth above ₹5 crore.
Draft Form A and the supporting papers
We prepare Form A, the disclosure document, the client agreement and the internal policies, with every annexure SEBI expects.
File on the SI portal and answer SEBI’s queries
The application goes online with the ₹1,00,000 fee. In practice, SEBI raises observations. We draft the replies.
Pay ₹10 lakh and open for clients
On in-principle approval you pay the ₹10,00,000 registration fee and SEBI issues the certificate in Form B. After that you appoint the custodian, open the client bank account and sign your first clients.
Timelines
Report to clients at least every three months
Under Regulation 31, each client gets a report on holdings, transactions, income and expenses at least once every three months.
Get the annual audit done within six months
Client accounts are audited yearly by a qualified auditor and the certificate goes to SEBI within six months of the financial year end (Regulation 30).
Tell SEBI 30 days before a material change
Report a change in status, constitution or control at least 30 days ahead, or when the board approves it, if earlier.
What happens if you break the rules
Unregistered PMS invites SEBI action
SEBI can pass directions against anyone running a PMS without the certificate, including orders to stop and to return client money.
Penalties under the SEBI Act
Where no separate penalty is provided, Section 15HB of the SEBI Act allows a penalty of not less than ₹1 lakh, which may extend to ₹1 crore.
Your registration is at risk
Taking clients below ₹50 lakh or promising returns can cost you the certificate itself.
Frequently asked questions
What is the minimum net worth for PMS registration?
The minimum is ₹5 crore. Regulation 9 of the SEBI (Portfolio Managers) Regulations, 2020 requires the applicant’s net worth to be not less than five crore rupees, and you must keep it there after registration. Net worth is paid-up capital plus free reserves, excluding revaluation reserves, less accumulated losses and deferred expenditure not written off, so it can differ from your paid-up capital. We check it on your audited accounts before you file.
Can an individual or a partnership firm become a portfolio manager?
No. Regulation 7(2)(a) requires the applicant to be a body corporate, and the definition of portfolio manager also refers to a body corporate. If you are an individual fund manager, the usual route is to incorporate a company, bring in the ₹5 crore net worth and appoint yourself as principal officer. We can set up the entity and the application together.
What is the minimum investment a PMS client must make?
Each client must invest at least ₹50 lakh in funds or securities. Regulation 23(2) bars the portfolio manager from accepting less. Clients who joined before 21 January 2020 with ₹25 lakh may stay, but any fresh contribution must take them to ₹50 lakh. A partial withdrawal cannot take the portfolio below the minimum either. Build these checks into onboarding and you stay safe.
What are the SEBI fees for PMS registration?
There are three fees under the Second Schedule. A non-refundable application fee of ₹1,00,000 goes with Form A. A registration fee of ₹10,00,000 is paid when SEBI is ready to grant the certificate. To keep the registration, the portfolio manager pays ₹5,00,000 every three years. Our professional fee is separate and quoted upfront, so you know the full cost before you start.
What qualifications does the principal officer need?
The principal officer needs a professional qualification in finance, law, accountancy or business management, or a CFA charter. Regulation 7(2)(d) also asks for at least five years of experience in related securities-market activities, of which at least two years must be in portfolio management, investment advisory or fund management. A relevant NISM certification is compulsory too. We review the CV first, before you spend anything.
What is the difference between discretionary and non-discretionary PMS?
In discretionary PMS, the portfolio manager decides what to buy and sell for each client. In non-discretionary PMS, the manager acts only on the client’s directions. Non-discretionary portfolios may hold up to 25% of a client’s assets in unlisted securities, while discretionary portfolios cannot hold unlisted securities. You choose the services you want to offer in the application.
Can a portfolio manager charge upfront fees or promise returns?
No to both. SEBI’s PMS FAQs say no upfront fee may be charged, directly or indirectly. Fees can be fixed, performance-based or a mix, as written in the client agreement, and performance fees follow the high-watermark principle. A portfolio manager also cannot offer indicative or guaranteed returns. Clear fee clauses in your agreement prevent most client disputes later.
Does the registration need to be renewed?
No separate renewal is needed. Under Regulation 12, the certificate stays valid unless SEBI suspends or cancels it. The portfolio manager must, however, pay ₹5,00,000 every three years and keep meeting the eligibility conditions, including the ₹5 crore net worth. Any change in control needs prior intimation to SEBI. We track these dates in your compliance calendar so nothing lapses.
What it costs
Our fee plus the government fee that applies to your case, quoted before you commit. Tell us the situation and we will price it exactly.
SEBI’s fees under the Second Schedule to the Portfolio Managers Regulations:
| SEBI fee | Amount | When paid |
|---|---|---|
| Application fee (non-refundable) | ₹1,00,000 | With Form A |
| Registration fee | ₹10,00,000 | Before the certificate is granted |
| Fee to keep registration | ₹5,00,000 | Every three years |
Ready to begin?
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