As on April 21, 2017, there are 383 Research Analyst and 658 Investment Advisers registered with SEBI. And the number is increasing. More people are applying for registration as Investment Adviser or Research Analyst.
However, most applicants are not clear about the information to be submitted in the application. SEBI has published information on its website www.sebi.gov.in regarding “How to get registered with SEBI as Investment Adviser / Research Analyst”. Despite the guidelines available, SEBI has several applications as pending for incomplete information.
I too have been writing on this subject and I get questions from prospective applicants, such as – Whether SEBI can reject the applications? What are the grounds on which SEBI can reject the application?
Let me first tell you that there are no perfect answers for any regulatory requirement. It all depends on the interpretation. Depending upon where your application lands up with SEBI, the concerned officer may apply a different lens and require additional information or may believe that you are not even required to have a registration.
Here are some of the grounds on which SEBI can put your application on hold, or in the worst case, reject your application.
#1 – Non-fulfillment of education qualification requirements
This is the most basic one. The qualification and certification requirements are mentioned in Regulation 7 of both Investment Advisers and Research Analyst Regulations. However, there is no list which states that your qualification meets the criteria or not. SEBI can put your application on hold if SEBI is of the view that you do not fulfill the requirements.
From your side, you should ensure that you confirm in advance about your qualification and then proceed with your application. In case of a deficiency, you may also want to take up a relevant course to fulfill this criterion.
Read more : Only Engineering degree not allowed – SEBI regulations
#2 – Non disclosure of complete information
While applying to SEBI, what really matters is your intention. It gets further strengthened with the clarity with which you disclose all the required information. This information includes notes about your proposed business, the products / services you are going to offer, brief business plan, etc. If you are a director in a company / partner in a firm, you should disclose the same very clearly.
Remember, if you submit incomplete information, SEBI is likely to put your application on hold and it can delay the whole process inordinately.
#3 – Incomplete set of documents
Various documents like past 3 years Income Tax returns, net-worth certificate, etc., are required to be submitted to SEBI along with the application. You are also required to submit certain declarations, as mentioned in the application form (Form A) itself. If you do not submit the full set of documents along with the application, SEBI can put your application on hold. In such cases SEBI can call for the documents or seek clarification.
#4 – Non-applicability of regulations
Are you sure that the Investment Advisers / Research Analyst regulations apply to you? You should first check the definitions and the exemptions mentioned in the regulations to know whether you should apply to SEBI or not. Even though you want to be “compliant with law”, your application may not be accepted since you may not need to register with SEBI. Of course, it may ask for more information.
#5- SEBI’s own discretion to not accept the application
You can submit your application at SEBI’s Head Office or the regional offices. It has been observed that the officials at the head office as well as the regional offices have different interpretation of the regulations. So, your application may be kept on hold if the officials are not satisfied of the information provided by you. You may be even called for a meeting with SEBI to clarify the information provided in your application.
To repeat myself, SEBI looks at the intent of the applicant while applying as IA or RA. More importance is given to the business activities the applicant plans to carry out. You are expected to have complete clarity about your business activities.
So, “Can SEBI reject my application?”
I have no perfect answer to it. But, if you provide incomplete or misleading information, it will definitely delay the process of your registration.
Get it right the first time. All the best!
Read more: How to get registered as an Investment Adviser with SEBI?
How to get registered as a Research Analyst with SEBI?
You can always reach out to me for help in application to SEBI. You can write to me at kruti@cskruti.com.
Hello
I am a freelance general market trend report research and compiler for an investment firm also run a LLP which provides retail insurance and sub brokerage services.
When I applied for RA they asked me to provide an undertaking stating my resignation from the said roles if the registration shall be provided to me, please help me understand why and also what should be my next step.
Hi Ananya, SEBI will see your business as a conflict of interest and hence will not approve your application unless you resign from the said roles. If you want to pursue RA practice, you will have to resign and submit proofs to SEBI. If you are not willing to resign, then you can withdraw the application.