Sebi allows one-year advance fees for advisers

The Securities and Exchange Board of India (Sebi) has approved a new rule allowing investment advisers (IAs) and research analysts (RAs) to charge advance fees for up to one year. This is an increase from the previous limits, which were six months for IAs and three months for RAs. Sebi Chairman Tuhin Kanta Pandey stated that this change aims to address concerns from the industry. Previously, IAs and RAs could only charge fees in advance for shorter periods, which some clients found restrictive. The new rule will enable them to collect fees for a longer term if clients agree. The updated regulations will apply mainly to individual clients and Hindu Undivided Families (HUFs). For corporate clients and institutional investors, fee agreements will be determined through negotiations. In addition to the fee changes, Sebi introduced measures to support lower-rated debt securities. Investments made by Category II alternative investment funds (AIFs) in debt rated 'A' or lower will now be treated like unlisted securities. This adjustment helps meet compliance requirements, as AIFs usually need to invest the majority of their funds in unlisted securities. Furthermore, Sebi updated regulations for the issuance of listed debt securities. From now on, any entity issuing these securities must do so exclusively in listed form. This change may reduce the availability of unlisted debt securities, which could affect AIFs in meeting their investment requirements.