How to convert from Individial RIA to Non-Individidual RIA?

If you are an individual Investment Adviser registered with SEBI, then the maximum number of clients you can service is 150.

Yes, that is the restrictions for individual RIAs only.

If you want to take on more clients, you need to get a non-individual RIA licence from SEBI.

The question that comes up frequently is:

How to prepare an application for a non-individual RIA licence?

Well, that’s what we cover today.

There are three areas you need to take care of:

1. Entity type
2. Net worth requirement
3. Qualification of the principal officer

First, decide whether you want to register as a partnership or LLP or company.

Each entity type has its own advantages and disadvantages.

While the registration fee for partnership firms is lesser than the LLP and the company, the liability of partners is unlimited, unlike LLP and company.

Second, once you decide the entity type, you have to start the process to form that entity.

You have to ensure that the net worth requirement of Rs. 50 lacs is fulfilled before the application is made. And yes, the net worth has to be of the entity and not your individual net worth.

Third, you have to ensure that you or anyone, who is meant to be the principal officer, fulfils the qualification, experience and certification requirements before you make the application.

Once all 3 are checked out, you are ready to make an application for registration as a non-individual RIA.

What is the application process?

The application process for investment advisers to get the licence from SEBI has changed recently.

Before September 2022, all the applications were processed directly by SEBI through its online portal.

Now the entire application process is taken care of by BSE Administration and Supervision Limited (BASL).

And all communications with SEBI happen only through BASL. SEBI portal for application for RIA licence is closed.

So, you have to approach BASL for the application process.

That’s not all! An investment adviser has to become a member of BASL as well.

So you have to make two applications:

1. Application to SEBI (via BASL) for registration as an Investment Adviser
2. Application to BASL for its membership.

The fee is also split between SEBI and BASL.

Here is my attempt to make the application process simpler to understand.

Steps for application for SEBI licence

1. Send an email to BASL at bseasl.membership@bseasl.com
2. BASL will send you a checklist – an excel sheet which has to be filled and submitted along with the supporting documents.
3. The format of the declarations will also be provided by BASL.
4. BASL will also share a word document – Form A – this is similar to Form A included in the IA regulations
5. Once you are ready with the documents and information, you need to submit the same via email to BASL.
6. If there are any questions / queries from BASL / SEBI, the same will be communicated to you via email only.
7. Once the application is approved, you will receive an email notification for payment of fees.

As I mentioned earlier, along with the application for the SEBI licence, you also need to make an application to BASL for its membership.

Steps for application for BASL membership:

1. Create an account / register yourself on BASL portal.
2. Fill the details required by BASL
3. Once you submit the initial form, BASL will approve the application.
4. Once approval is received, you need to login to the portal and upload documents and information.
5. If there are any discrepancies, the same have to be resolved on the BASL portal only.
6. The application will then be processed and approved by BASL.

You will receive the IA registration number only after the SEBI and the BASL application is approved and payment of fee is made.

You will then receive the SEBI registration certificate (via post) as well as the BASL membership certificate (via email).

You must be wondering what happens to the individual licence. 

During the application process and once you get an in-principle approval from SEBI, BASL will ask you to surrender your individual registration. You will have to submit your individual registration certificate to SEBI and give a notice in a newspaper mentioning the reason for surrender.

You will then be issued a new registration number and a new registration certificate by SEBI.

While it is easy to get in touch with the BASL team, the process is tedious and requires continuous follow-ups and submissions to BASL. Be patient and factor in a few months from application to approval.

Frequently Asked Questions: 

Q1 – Can I apply for a non-individual license even if I have not crossed the limit of 150 clients?

A: Yes, you can apply for a non-individual license even if the number of clients is less than 150. As mentioned earlier, you will have to surrender your individual license and you will get a new registration number for the entity.

Q2 – Who can be appointed as a Principal Officer (PO) before making the application?

A: In my view, since the individual license is in your name, you should be appointed as a PO. However, if you do not fulfill the qualification requirements, you have to employ someone who fulfills the said requirements. The employee (PO) needs to be appointed as a director or a partner before making the application.

In case such an employee resigns, the entity will have to hire someone who fulfills the requirements. You will have to inform SEBI about the changes accordingly.

Q3 – Will my experience as an Individual RIA be considered if I am the PO?

A: Yes, it will be provided you have serviced clients under your individual license.

Q4 – Is the process for a new application for IA registration the same? 

A: The process is the same when you are planning to make a fresh application for registration either as an individual or non-individual RIA.

Q5 – How much time does the non-individual registration process take? Is it faster when we convert from individual RIA to non-individual RIA ?

A: The registration process takes around 3-5 months since the process is the same.

---

If you are looking for professional help in making an application for registration as a RIA, you can write to me at kruti@cskruti.com