SEBI eases rules for IAs, RAs; allows email consent from existing clients for Most Important T&C

Capital markets regulator SEBI on Monday relaxed compliance norms for Investment Advisers (IAs) and Research Analysts (RAs), allowing them to obtain email confirmations from existing clients for the Most Important Terms and Conditions (MITC).

SEBI also issued the standardised MITC format for both RAs and IAs. These conditions must be communicated to existing clients via email or any other preservable mode by June 30, 2025, instead of requiring fresh physical agreements.

For new clients, RAs and IAs have to incorporate the MITC into their 'Terms and Conditions' of providing services, disclose the full agreement to clients, and obtain consent through a physical or digital signature.

The move comes after concerns were raised by RAs over ease-of-doing-business issues.

A recent report by Moneycontrol said that SEBI was reconsidering some of the guidelines issued to RAs, including the requirement for physical or digital signatures from clients for MITC confirmation. The report suggested that the regulator might allow RAs to send emails to clients instead, a decision that has now been formalised in the latest circulars.

The MITC for IAs, standardised by the Industry Standards Forum (ISF) in consultation with SEBI and the Investment Adviser Administration and Supervisory Body (IAASB), mandates clear disclosures on advisory fees, risk profiling, and restrictions on assured returns. IAs are prohibited from executing trades on behalf of clients and must charge fees within prescribed limits, currently set at ₹1.51 lakh per annum per family or 2.5% of Assets under Advice (AUA) annually.

The MITC for RAs, framed in consultation with the Research Analyst Administration and Supervisory Body (RAASB), outlines obligations regarding transparency, conflict of interest management, and prohibition of guaranteed returns.

Research services fees for individual and HUF clients are capped at ₹1.51 lakh per annum.

The circulars specify that RAs can collect advance fees for a maximum of three months, while IAs can collect up to six months’ fees in advance. However, SEBI has floated a consultation paper proposing an extension of this period to one year following strong protests from both registered entities.