Anyone who intends to carry out any of the activities of an investment adviser shall apply for an Investment Adviser License. Investment adviser’s license is categorized into two: Restricted and Unrestricted.
An Unrestricted Investment Adviser has the authority to manage portfolios of securities and give advice on various securities transactions, whereas a Restricted Investment Adviser only has authority to give advice on securities transactions.
An individual shall not conduct any activities of an investment adviser unless he has procured the relevant licenses as an adviser.
Unrestricted Investment Adviser
The applicant while lodging the documents requested for by the FSC should also note to pay the processing fee of Rs 5,000. The Investment Adviser shall also be required to pay an annual fee of Rs 25,000.
The Investment Adviser shall justify to the FSC that it has competent personnel who will be in-charge of the investment advice and the management of portfolios. The Adviser should also satisfy FSC that it has adequate internal structures, systems and procedures to ensure that business runs efficiently and also that information is not accessed by unauthorized 3rd parties.
The applicant should have a minimum stated unimpaired capital of Rs 600,000. It is important to note that the applicant must undertaking not to start its operations prior to meeting its minimum unimpaired stated capital.
The applicant is also mandated to provide a Professional Indemnity cover to conduct business as an Investment Advisor. The value of the Professional Indemnity cover is dependent on the volume of activities and risk involved.
Restricted Investment Adviser
The applicant will be required to pay a processing fee of Rs 5,000 and an annual fee of Rs 15,000.
The applicant should provide a minimum unimpaired stated capital of Rs 500,000 or an equivalent amount, which should be provided before the adviser begins operations.
An Investment Adviser should have a minimum of a degree from a recognized university with bias towards finance, capital markets, financial services, business administration, financial planning. He/she shall also hold at least 3 years relevant experience in investment business.