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June 2026Q. 6(c)5 marksSyllabus 2022
(c)Explain the changes made by SEBI vide its notification Dated 25th November 2025 in the provisions pertaining to qualification and certification requirement for Investment Advisers.
Amended provisions pertaining to Qualification and certification requirement for Investment Advisers as per Regulation 7 of the SEBI (Investment Advisers) Regulations, 2013
An individual investment adviser or a principal officer of a non-individual investment adviser registered as an investment adviser under these regulations or persons associated with investment advice shall have the following minimum qualifications, at all times:
(a)A graduate degree or any equivalent educational qualification from a university or institution recognized by the Central Government or any State Government or a recognized foreign university or institution or association or CFA Charter from the CFA Institute, and relevant certification from NISM or from any other organization or institution accredited by NISM; or
(b)A Post Graduate Program in the Securities Market (Investment Advisory) from NISM or a Post Graduate Program in Financial Planning from NISM; or any other program of NISM as may be specified by the SEBI.
However, the investment advisers registered as on the date of commencement of these regulations shall ensure that the individual Investment adviser or principal officer of a nonindividual investment adviser registered and persons associated with investment advice shall comply with the qualification and experience requirements as per the timelines specified by SEBI. However, the above requirements shall not apply to such existing individual investment advisers as may be specified by the SEBI.
An individual investment adviser or principal officer of a non-individual investment adviser, registered under these regulations, persons associated with investment advice, and in case of investment adviser being a partnership firm, the partners thereof who are engaged in providing investment advice, shall obtain a fresh relevant NISM certification as specified by the Board from time to time before expiry of the validity of the existing certification or within three years from the date of registration certificate , as the case may be, to ensure continuity in compliance with certification requirements.
Source: ICSI Guideline Answers, June 2026, Q. 6(c) (Syllabus 2022).
December 2025Q. 6(c)5 marksSyllabus 2022
(c)SEBI vide circular “SEBI (Research Analysts) (Third Amendment) Regulations, 2024 [Notification No. SEBI/LAD-NRO/GN/2024/220 dated December 16, 2024] ’ has made certain changes in the provisions related to the following :
(i)The capital adequacy requirement for the research analyst
(ii)Appointment of compliance officer.
Explain the changes made in this context.
SEBI vide circular SEBI (Research Analysts) (Third Amendment) Regulations, 2024 dated December 16, 2024 made the following amendments pertaining to funding related aspects:
Capital Adequacy requirement for the Research Analyst
The capital adequacy requirement for the research analyst is substituted with deposit requirements under regulation 6(vi) and regulation 8. Regulation 8 is reproduced below:
“Deposit.
(1)A research analyst shall maintain a deposit of such sum as specified by the Board from time to time.
(2)The deposit shall be maintained with a scheduled bank, marked as lien in favour of a body or body corporate recognised by the Board for the purpose of administration and supervision of research analysts in accordance with Regulation 14 of these regulations.
However, such deposit shall be available for utilization in case the research analyst fails to pay dues emanating out of arbitration and conciliation proceedings, if any, under the Online Dispute Resolution Mechanism or such other mechanism as may be specified by the Board.
Appointment of Compliance Officer (Regulation 26)
A non-individual research analyst or research entity shall appoint either:
(i)a compliance officer; or
(ii)an independent professional who is a member of ICSI, ICAI or ICMAI or member of any other professional body as may be specified by the SEBI, provided that such a professional holds a relevant certification from NISM, as specified by the Board who shall be responsible for monitoring the compliance of the provisions of the Act, these regulations and circulars issued by the SEBI.
Where independent professional referred above is appointed for monitoring compliance, the principal officer shall submit an undertaking to the SEBI or the body or body corporate recognised under Regulation 14 of these regulations to the effect that principal officer shall be responsible for monitoring the compliance in respect of the requirements of the Act, regulations, notifications, guidelines, instructions issued by the SEBI.
Source: ICSI Guideline Answers, December 2025, Q. 6(c) (Syllabus 2022).
June 2025Q. 5(c)5 marksSyllabus 2022
(c)Intermediaries are an integral part of securities market. They are the facilitators ensuring seamless functioning of securities market. SEBI regulates various intermediaries in the primary markets through Regulations for these intermediaries. These Regulations allow SEBI to inspect the functioning of these intermediaries and to ensure that their conduct is market appropriate and fair.
Based on the above statements answer the following questions :
(i)Whether insurance agent or insurance broker is exempted from obtaining registration under SEBI (Investment Advisers) Regulations 2013.
(ii)Whether a person acting in multiple capacities such as insurance agent, pension advisor, mutual fund distributor, etc. is exempted from obtaining registration under IA Regulations ?
(iii)How does an Investment Advisor redress grievance of the investor clients ?
(i)
Registration under SEBI (Investment Advisers) Regulations, 2013
Regulation 4 of the SEBI (Investment Advisers) Regulations, 2013 provides that any insurance agent or insurance broker who offers investment advice solely in insurance products and is registered with Insurance Regulatory and Development Authority for such activity shall not be required to seek registration under the under SEBI (Investment Advisers) Regulations, 2013. Insurance Agents or Insurance Brokers registered with IRDA who provide advice in various insurance products across manufacturers shall be regulated by IRDA only. If such Insurance Agents or Insurance Brokers expand their activities to include investment advice on other financial products, then they shall register and be regulated under the SEBI (Investment Advisers) Regulations, 2013 for financial products other than insurance products.
(ii)
Registration if acting in multiple capacities
A person acting in multiple capacities such as insurance agent, pension advisor, mutual fund distributor, etc. planning to expand his/her scope of activities to include investment advice on other financial products or engaged in the financial planning of the clients shall be registered and regulated under the SEBI (Investment Advisers) Regulations, 2013for advising on such other financial products or financial planning of the clients.
(iii)
Redressal of client grievances
•An investment adviser shall redress client grievances promptly but not later than twenty-one calendar days from the date of receipt of the grievance.
•An investment adviser shall have adequate procedure for expeditious grievance redressal.
•Client grievances pertaining to financial products in which investments have been made based on investment advice, shall fall within the purview of the regulator of such financial product.
•Any dispute between the investment adviser and his client shall be submitted to a dispute resolution mechanism that includes mediation and/or conciliation and/or arbitration in accordance with the procedure specified by SEBI or through Ombudsman authorized or appointed for the purpose by any regulatory authority, as applicable.
Source: ICSI Guideline Answers, June 2025, Q. 5(c) (Syllabus 2022).
December 2024Q. 6(d) (CFLSE)5 marksCorporate Funding and Listings in Stock Exchanges paper, Syllabus 2017
(d)Explain briefly the due diligence procedure that a merchant banker is expected to carry out during an IPO.
Due Diligence Procedure by a merchant banker during an IPO
(i)Carry out the procedures to demonstrate that it had no reasonable ground to believe and did not believe that there were material misstatements or omissions in the Offer Documents which could have had an impact on an investment decision;
(ii)Have detailed discussions with the management and key customers, suppliers (where practicable) and the Issuer’s auditors with respect to the business and associated risks and financial reporting statements;
(iii)Identify procedures such that disclosures in the Offer Document that are material to an investment decision are backed by appropriate documentation, such as corporate and secretarial records or certificates of the Issuer or third parties and independent third-party reports; and
(iv)inform the Issuer that it may be required to provide documents that have been reviewed for an Issue, post completion of the Issue in instances of receipt of clarifications or questions from SEBI or other regulatory agencies or other persons.
It must be clearly understood that due diligence is the backbone of any primary market offering. The risk that the Merchant Banker runs for any lapse in conducting due diligence is not restricted only to any regulatory action but extends to reputational risk with the investors & Issuers.
Though Merchant Bankers are supposed to carry out diligence and comply with all the requirements of applicable regulations, the Company and the Management is responsible for the contents of offer document and have to declare and certify that all the information in the offer document is true and fair. Offer document being a legal document defined under the Companies Act as well as applicable regulations, responsibility of the management is final.
Source: ICSI Guideline Answers, December 2024, Q. 6(d) (Corporate Funding and Listings in Stock Exchanges paper, Syllabus 2017).
June 2024Q. 4(b)5 marksSyllabus 2022
(b)Which entities are exempted from registration under the SEBI (Investment Advisers or IA) Regulations 2013 ? Briefly explain.
Exemptions from registration under Investment Advisers Regulations
The following entities have been exemptions from registration under the SEBI (Investment Adviser) Regulations, 2013:
a)Any person who gives general comments in good faith in regard to trends in the financial or securities market or the economic situation where such comments do not specify any particular securities or investment product;
b)Entities which are providing advice/incidental advice to their primary activity and are regulated by the respective regulator/self-regulatory body/institute. These include-
i.Insurance agent or insurance broker;
ii.Any pension advisor;
iii.Any distributor of mutual funds;
iv.Any advocate, solicitor or law firm;
v.Any member of Institute of Chartered Accountants of India, Institute of Company Secretaries of India, Institute of Cost and Works Accountants of India, Actuarial Society of India or any other professional body;
vi.Any stock broker, portfolio manager or merchant banker registered under respective SEBI Regulations, who provides any investment advice to its clients incidental to their primary activity:
However, such intermediaries shall comply with the general obligation(s) and responsibilities as specified in Chapter Ill of Investment Adviser regulations.
vii.Any fund manager of a mutual fund, alternative investment fund or any other intermediary, by whatever name called.
c)Any person who provides investment advice exclusively to clients based out of India (except Non-Resident Indian or Person of Indian Origin).
d)Any principal officer, persons associated with advice and partner of a registered investment adviser. However, such principal officer, persons associated with advice and partner shall comply with regulation 7 of these regulations;
e)Any other person as may be specified by SEBI.
Source: ICSI Guideline Answers, June 2024, Q. 4(b) (Syllabus 2022).
June 2023Q. 5(d) (CFLSE)5 marksCorporate Funding and Listings in Stock Exchanges paper, Syllabus 2017
(d)M/s PQR Limited is a non-listed company. It has plan of raising finance through public issue of shares.
M/s POQ Limited has appointed M/s Fair Issue Merchant Bankers. You are working with M/s Fair Issue Merchant Bankers as operation in-charge. You are given the task for preparing the offer document for public issue of M/s PQR Limited. In this context, explain the relevance of ‘‘Virtual Data Room’’.
Preparation for an offer document involves humungous documentation and paper work. At the time of commencement of due diligence Merchant Banker and the Legal Advisor circulate the 'Compliance Manual enumerating detailed requirements along with various formats and undertakings to be submitted by the Company. Only on compiling the majority of documents the process of diligence actually starts.
Companies set up specific location where all the documents and the copies of the same are made available for examination & verification. Such location is popularly known as 'Data Room' In the present scenario these data rooms are also set up in virtual space and are called as 'Digital Data Room' or 'Virtual Data Room' on various drives such as google drive. All the concerned executives will have access to the Data Room while drafting the offer document. Essentially, a virtual data room is a secure online repository for document storage and distribution used in the due diligence process – used by a merchant banker / lawyers / intermediaries in relation to a public / rishis issue.
Source: ICSI Guideline Answers, June 2023, Q. 5(d) (Corporate Funding and Listings in Stock Exchanges paper, Syllabus 2017).
June 2021Q. 6(d) (CFLSE)5 marksCorporate Funding and Listings in Stock Exchanges paper, Syllabus 2017
(d)Explain the procedure of Due Diligence as expected to be carried by a Merchant Banker for an IPO.
The SEBI Regulations requires a Merchant Banker, amongst other things, to exercise due diligence, ensure proper care and exercise independent professional judgment. The SEBI Regulations requires Merchant Banker to maintain records and documents pertaining to due diligence exercised in pre-issue and post-issue matters. Furthermore, the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 require due diligence certificate to be issued by the Merchant Banker.
A Merchant Banker for an IPO is expected to:
i.carry out the procedures to demonstrate that it had no reasonable ground to believe and did not believe that there were material misstatements or omissions in the Offer Documents which could have had an impact on an investment decision;
ii.have detailed discussions with the management and key customers, suppliers (where practicable) and the Issuer's auditors with respect to the business and associated risks and financial reporting statements;
iii.identify procedures such that disclosures in the Offer Document that are material to an investment decision are backed by appropriate documentation, such as corporate and secretarial records or certificates of the Issuer or third parties and independent third party reports; and
iv.inform the Issuer that it may be required to provide documents that have been reviewed for an Issue, post completion of the Issue in instances of receipt of clarifications or questions from the SEBI or other regulatory agencies or other persons.
It must be clearly understood that due diligence is the backbone of any primary market offering. The risk that the Merchant Banker runs for any lapse in conducting due diligence is not restricted only to any regulatory action but extends to reputational risk with the investors & Issuers.
Though Merchant Bankers are supposed to carry out diligence and comply with all the requirements of applicable regulations, the Company and the Management is responsible for the contents of offer document and have to declare and certify that all the information in the offer document is true and fair. Offer document being a legal document defined under the Companies Act as well as applicable regulations, responsibility of the management is final. Companies need to prepare and be ready for the process of the diligence.
Source: ICSI Guideline Answers, June 2021, Q. 6(d) (Corporate Funding and Listings in Stock Exchanges paper, Syllabus 2017).
December 2019Q. 2(a) (CFLSE)5 marksCorporate Funding and Listings in Stock Exchanges paper, Syllabus 2017
(a)Shaurya Ltd. a company dealing with glass molding and peripherals has plans to go public and raise ₹ 1,000 crores. They appoint CFQ Financial Services as their lead managers. The company’s directors having no knowledge of rules and regulations argue with the lead managers that 40% of shares are to be allotted to public, 40% to QIBs, 10% to HNI clients and balance to be taken by underwriters. As a Company Secretary, explain to the directors the Regulations 40 & 136 of underwriting.
The directors of the company are not correct as the rules pertaining to issue states that allotment of shares has to be made based on the following regulation:
(Regulation 40 & 136 of SEBI (Issue of Capital and Disclosure Requirements)
Regulations, 2009
•If an issuer makes a IPO/FPO other than through the book building process, desires to have the issue underwritten, it shall appoint the underwriters in accordance with the SEBI (Underwriters) Regulations, 1993.
•If the issuer makes a public issue through a book building process:
(a)the issue shall be underwritten by lead managers and syndicate members. However, at least 75% of the net offer to the public is proposed to be compulsorily allotted to the QIBs, and such portion cannot be underwritten.
(b)the issuer shall, prior to filing the prospectus, enter into an underwriting agreement with the lead manager(s) and syndicate member(s) which shall indicate the number of specified securities which they shall subscribe to at the predetermined price in the event of under-subscription in the issue.
(c)if the syndicate member(s) fail to fulfil their underwriting obligations, the lead manager(s) shall fulfil the underwriting obligations.
(d)the lead manager(s) and syndicate member(s) shall not subscribe to the issue in any manner except for fulfilling their underwriting obligations.
(e)in case of every underwriting issue, the lead manager(s) shall undertake minimum underwriting obligation as specified in the SEBI (Merchant Bankers) Regulations, 1992.
(f)where the issue is required to be underwritten, the underwriting obligations should at least to the extent of minimum subscription.
Source: ICSI Guideline Answers, December 2019, Q. 2(a) (Corporate Funding and Listings in Stock Exchanges paper, Syllabus 2017).
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