Foreign portfolio investors may avail portfolio management services from a portfolio manager under the Securities and Exchange Board of India (Portfolio Managers) Regulations, 2026. Eligibility to use these services is expressly extended to foreign portfolio investors within the framework of general obligations and responsibilities applicable to portfolio managers.

Portfolio managers must act under client agreements and may invest or advise in permitted securities, subject to Board-specified conditions for foreign securities, unlisted securities, and derivatives. Mutual fund investments must be made through direct plans without distribution-related client fees. Client-level prudential limits, credit-rating requirements, and alert-based monitoring apply, while investments in unrated securities of related parties or associates are prohibited. Client funds and securities must be segregated and safeguarded, with controlled aggregation, transfer, and securities-lending arrangements. Clients retain early withdrawal rights on termination, registration action, or portfolio manager bankruptcy or liquidation.

Portfolio managers must act in a fiduciary capacity, segregate each client's securities holdings, and maintain client funds in a separate account with a Scheduled Commercial Bank. They must not derive undue benefit from client assets, borrow funds or securities for clients, or lend client-held securities except where permitted. They must also redress investor grievances within twenty-one calendar days, apply valuation and advertising requirements, report performance uniformly, maintain written asset-management policies, and comply with performance-benchmarking and investor-protection requirements.

Portfolio managers must enter written client agreements before managing funds or portfolios and obtain prior client consent for related-party or associate investments, unless exempted. A certified Disclosure Document must be provided before the agreement, updated annually, made available online, and revised and communicated within fifteen calendar days of material changes. It must disclose fees, risks, conflicts, related-party matters, financial statements and performance. Fees may be fixed, return-based, or combined, but cannot involve assured returns or up-front charges.

Portfolio managers must comply with the Code of Conduct specified in the Second Schedule. Compliance constitutes a mandatory component of the general obligations and responsibilities applicable to every portfolio manager. The requirement applies to all portfolio managers and requires adherence to the conduct standards set out in that Schedule as part of their responsibilities under the portfolio-management regulatory framework.

Co-investment portfolio managers are subject to the Portfolio Managers Regulations mutatis mutandis, except for Regulation 4(a)(iv) and 4(b)(i)-(ii), Regulation 6(4), Regulation 15(2)(c)(ix) and 15(2)(h), Regulation 16(3) and (6), Regulation 17(4)(a)(i), Regulation 19, Regulation 27(1)-(3), and clause 8(i)-(ii) of the Third Schedule. Remaining provisions apply unless the context otherwise requires or application conflicts with this chapter.

Co-investment portfolio managers must ensure that co-investors do not receive investment terms more favourable than those of the Alternative Investment Fund, while exit terms and timing must be identical. Early withdrawal is allowed only to the extent of the fund's corresponding exit. Performance is calculated using the method agreed with the client. All assets under management must be invested in unlisted securities of investee companies in which Category I or Category II Alternative Investment Funds managed by the manager invest.

Eligible fund managers must provide agreed investment or advisory services, make material disclosures, and operate under mutually agreed contracts. They must segregate eligible investment fund assets and accounts from those of other funds and clients, appoint a custodian for Indian investments where required, and keep funds in scheduled commercial banks subject to stated exceptions. They must also maintain specified records, submit monthly reports, comply with anti-money-laundering law, and follow applicable portfolio management and foreign portfolio investment requirements.

New body corporate applicants seeking eligible fund manager registration must fulfil applicable tax eligibility conditions, comply with Chapter II requirements unless otherwise specified, pay prescribed fees, and submit a Board-specified declaration. Existing portfolio managers may manage eligible investment funds after fulfilling the applicable conditions, intimating the Board before commencing the activity, and submitting prescribed declarations.

Regulation 9 applies Chapter III exclusively to eligible fund managers conducting portfolio-management activities for eligible investment funds investing in Indian or foreign securities. For funds investing in Indian securities, the regulations apply mutatis mutandis except for specified provisions and the Third Schedule. For funds investing in foreign securities, applicability is confined to Chapters I, II and III and Regulation 16(2), subject to contextual consistency with Chapter III.

A portfolio manager intending to discontinue portfolio-management activity must apply to the Board for surrender of its certificate of registration. The surrender process must follow the manner and conditions specified by the Board, requiring formal compliance for relinquishing registration.

Continuance of registration for portfolio managers requires payment of the requisite First Schedule fee within the three months preceding expiry of the relevant three-year fee block. Non-payment may result in suspension of the registration certificate by the Board, requiring the portfolio manager immediately to cease all portfolio-management activity for the full period of suspension. Registration can remain in force only through timely payment of the prescribed fee.

Certificate of registration conditions require a portfolio manager to comply with applicable law, promptly disclose materially false, misleading or changed information, and redress investor grievances within twenty-one calendar days while reporting complaint particulars. The portfolio manager must continuously maintain prescribed net worth, secure prior approval for change in control, remain fit and proper, and commence business within the stipulated period after fulfilling Board-specified conditions.

Portfolio manager registration certificate refusals require a reasonable opportunity of being heard, followed by communication of the refusal and reasons within thirty days. An applicant may seek reconsideration within thirty days of receiving the communication. The Board must reconsider the request and convey its decision in writing as soon as possible.

Portfolio manager registration requires assessment of body corporate status, adequate infrastructure, designated personnel, fit-and-proper status, and investor interest. Applicants must maintain minimum net worth independently of other capital requirements, with a prescribed portion in unencumbered liquid assets; existing portfolio managers must comply within twelve months. Principal officers require prescribed qualifications, certification and securities-market experience. An additional graduate employee requires related experience, while personnel or independent fund managers with fund-management decision-making authority must meet the principal officer standards.

Registration of portfolio managers requires an application in the prescribed form with the non-refundable application fee. The Board may request further information, and an incomplete application may be rejected only after the applicant receives at least thirty calendar days to cure notified objections. An applicant satisfying regulation 4 receives an intimation to pay the prescribed registration fee within thirty calendar days. Following payment, the Board may grant a registration certificate, which remains valid unless suspended or cancelled.

Portfolio management definitions establish the scope of regulated portfolio management, client arrangements, investment mandates, and connected persons. A portfolio manager is a body corporate that, under a client contract, advises, directs, undertakes, manages, or administers portfolios comprising securities, goods, or client funds. Discretionary management permits complete investment discretion, while non-discretionary management follows client directions. Governance concepts cover associates, related parties, change in control, principal officers, inspecting authorities, certificates, and net worth.

Portfolio-manager regulation establishes a framework for registration of portfolio managers and defines their operational and general obligations and responsibilities, including matters connected or incidental to those functions. The framework takes effect on 1 April 2027.

Regulation 16Q authorises the Board to take appropriate action for violations of obligations under the relevant chapter or circulars issued under it. Available measures may include action under Chapter V, the relevant Act, or other regulations issued by the Board. The Board may also direct supervisory bodies to take appropriate action for such violations, creating a parallel route for regulatory enforcement.

Regulation 16P, inserted into the Securities and Exchange Board of India (Intermediaries) Regulations, 2008, makes reporting requirements for advertisements issued by regulated entities applicable in the manner specified by the Board from time to time. The substantive reporting framework remains subject to continuing Board specifications for advertisements under the common advertisement code.