To enforce rigid operational standards and accountability by Portfolio Managers the Regulations of SEBI provide for stringent measures in respect of-

1. 1. maintenance of books of accounts, records and documents (Regulation 17)

2. Every Portfolio Manager shall, after the end of each accounting period, is required furnish to the Board copies of the balance sheet, profit and loss account. Additionally the Board may ask for such other documents as are mentioned in any of the regulations for any other preceding five accounting years when required by the Board.

3. Every portfolio manager shall furnish to the Board half- yearly-unaudited financial results when required by the Board with a view to monitor the capital adequacy of the portfolio manager. (Regulation 18)

1. The portfolio manager shall maintain separate client-wise accounts

2. The funds received from the clients, investments or disinvestments and all the credits to the account of the client like interest, dividend, bonus, or any other beneficial interest received on the investment and debits, for expenses, if any, shall be properly accounted for and details thereof shall be properly reflected in the client's account.

3. The tax deducted at source as required under the provisions of the Income-Tax Act, 1961, (43 of 1961) shall be recorded in the portfolio account.

1. Regulation 20(2): The books of account will be audited yearly by qualified auditor to ensure that the portfolio manager has followed proper accounting methods and procedures and that the portfolio manager has performed his duties in accordance with the law. A certificate to this effect shall, if so specified, be submitted to the Board within six months of close of portfolio manager's accounting period.

2. Regulation 20(3): The portfolio accounts of the portfolio manager shall be audited annually by an independent chartered accountant and a copy of the certificate issued by the chartered accountant shall be given to the client.

3. Regulation 20(4): The client may appoint a chartered accountant to audit the books and accounts of the portfolio manager relating to his transactions and the portfolio manager shall co-operate with such chartered accountant in course of the audit".

1. The portfolio manager shall furnish periodically a report to the client, as agreed in the contract, but not exceeding a period of six months and as and when required by the client" and such report shall contain the following details, namely: -

   1. the composition and the value of the portfolio, description of security, number of securities, value of each security held in the portfolio, cash balance and aggregate value of the portfolio as on the date of report;

   2. transactions undertaken during the period of report including date of transaction and details of purchases and sales;

   3. beneficial interest received during that period in respect of interest, dividend, bonus shares, rights shares and debentures;

   4. expenses incurred in managing the portfolio of the client;

   5. details of risk foreseen by the portfolio manager and the risk relating to the securities recommended by the portfolio manager for investment or disinvestment.

1. A) the report referred to in sub-regulation (1) may be made available on the website of the portfolio manager with restricted access to each client.

2. The portfolio manager shall also furnish to the client documents and information relating only to the management of a portfolio, in terms of the agreement with the client"

3. On termination of the contract, the portfolio manager shall give a detailed statement of accounts to the client and settle the account with the client as agreed in the contract.

4. The client shall have the right to obtain details of his portfolio from the portfolio managers."

A portfolio manager shall disclose to the Board as and when required the following information namely;

1. particulars regarding the management of a portfolio;

2. any change in the information or particulars previously furnished, which have a bearing on the certificate granted to him;

3. the names of the clients whose portfolio he has managed;

4. particulars relating to the capital adequacy requirement as specified in regulation 7

1. Every portfolio manager shall appoint a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications, guidelines , instructions etc., issued by the Board or the Central Government and for redressal of investors' grievances.

2. The compliance officer shall immediately and independently report to the Board any non-compliance observed by him.

Chapter IV of the Regulations spell outs the powers vested with SEBI for conducting Inspections over the Establishment of Portfolio Managers and for initiating Disciplinary action. Chapter V deals with defaults (offences) & Penalties

1. A Portfolio Manager shall, in the conduct of his business, observe high standards of integrity and fairness in all his dealings with his clients and other Portfolio Managers.

2. The money received by a portfolio manager from a client for an investment purpose should be deployed by the portfolio manager as soon as possible for that purpose and money due and payable to a client should be paid forthwith.

3. A Portfolio Manager shall render at all times high standards of service, exercise due diligence, ensure proper care and exercise independent professional judgement. The portfolio manager shall either avoid any conflict of interest in his investment or disinvestment decision, or where any conflict of interest arises, ensure fair treatment to all his customers. He shall disclose to the clients, possible sources of conflict of duties and interests, while providing unbiased services. A portfolio manager shall not place his interest above those of his clients.

4. A Portfolio Manager shall not make any statement or become privy to any act, practice or unfair competition, which is likely to be harmful to the interests of other Portfolio Managers or is likely to place such other Portfolio Managers in a disadvantageous position in relation to the Portfolio Manager himself, while competing for or

5. A Portfolio Manager shall not make any exaggerated statement, whether oral or written, to the client either about the qualification or the capability to render certain services or his achievements in regard to services rendered to other clients.

6. At the time of entering into a contract, the portfolio manager shall obtain in writing from the client, his interest in various corporate bodies which enables him to obtain unpublished price-sensitive information of the body corporate.

7. A Portfolio Manager shall not disclose to any clients, or press any confidential information about his client, which has come to his knowledge.

8. The portfolio manager shall where necessary and in the interest of the client take adequate steps for registration of the transfer of the clients' securities and for claiming and receiving dividends, interest payments and other rights accruing to the client. He shall also take necessary action for conversion of securities and subscription/renunciation of/or rights in accordance with the clients' instruction.

9. A Portfolio Manager shall endeavour to -

   1. ensure that the investors are provided with true and adequate information without making any misguiding or exaggerated claims and are made aware of attendant risks before any investment decision is taken by them;

   2. Render the best possible advice to the client having regard to the client's needs and the environment, and his own professional skills.

   3. ensure that all professional dealings are effected in a prompt, efficient and cost effective manner.

10. (1) A Portfolio Manager shall not be a party to -

    1. creation of false market in securities

    2. price rigging or manipulation of securities

    3. passing of price sensitive information to brokers, members of the stock exchanges and any other intermediaries in the capital market or take any other action which is prejudicial to the interest of the investor

10. (2) No Portfolio manager or any of its directors, partners or manager shall either on their respective accounts or through their associates or family members, relatives enter into any transaction in securities of companies on the basis of unpublished price sensitive information obtained by them during the course of any professional assignment.

11. Regulation 11A

    1. A Portfolio Manager or any his employees shall not render, directly or indirectly any investment advice about any security in the publicly accessible media, whether rea-time or non-real-time, unless a disclosure of his long or short position in the said security has been made, while rendering such advice.

    2. In case an emplyoee of the Portfolio Manager is rendering such advice, he shall also disclose the interest of his dependent family members and the employer including their long or short position in the said security, while rendering such advice.

12. Regulation 12

    1. The portfolio manager shall abide by the Act, and the Rules, Regulations made thereunder and the Guidelines / Schemes issued by the Board.

    2. The portfolio manager shall comply with the model code of conduct specified in the SEBI (Prohibition of Insider Trading) Regulations, 1992.

    3. The portfolio manager shall not use his status as any other registered intermediary to unduly influence the investment decision of the clients while rendering portfolio management services.