The Securities and Exchange Board of India (SEBI) has relaxed certain compliance requirements for Research Analysts (RAs) and Investment Advisors (IAs), allowing them to inform existing clients about the Most Important Terms and Conditions (MITC) via email or any other preservable mode of communication.
This move confirms a Moneycontrol report from February 5, which stated that SEBI was reconsidering certain guidelines following industry feedback. Earlier, RAs and IAs were required to obtain physical or digital signatures from clients to confirm the MITC. Now, they can instead send an email notification.
In circulars issued on February 17, SEBI provided a standardized format for MITC applicable to both RAs and IAs. According to the circular, RAs must inform their existing clients of the MITC via email or another suitable mode by June 30, 2025. The same directive applies to IAs.
For new clients, however, RAs and IAs must incorporate the MITC within their Terms and Conditions and obtain consent via physical or e-signature.
The MITC specifies the maximum annual fee an RA or IA can collect per family and the advance payment duration. As per current regulations, RAs can collect advance fees for up to three months, while IAs can collect for six months. However, SEBI has released a consultation paper proposing an extension to one year following strong industry opposition to the existing limits.
