Capital adequacy requirement requires portfolio managers to maintain prescribed networth and meet separate requirements for each activity. Regulation 7 requires portfolio managers to meet a capital adequacy requirement in the form of a prescribed minimum networth, defined as paid up equity capital plus free reserves excluding revaluation reserves, reduced by accumulated losses and deferred expenditure not written off; transitional staged increases apply to existing managers, and the capital adequacy obligation must be fulfilled separately for each activity undertaken under the regulations.