The Board may grant a time-limited exemption from all or specified Portfolio Managers Regulations to a person or class of persons. The exemption may operate for up to twelve months and is intended to support live-environment testing of innovative products, processes, services and business models in the securities-market regulatory sandbox. Applicants must satisfy conditions specified by the Board.

Regulation 43 permits relaxation of strict enforcement for portfolio managers where it serves clients' interests or securities market development. Relaxation may be procedural or technical, arise from non-compliance caused by factors beyond the portfolio manager's control, or prevent undue hardship to clients. Applications must state the relevant details and grounds, be filed with the Board, and be accompanied by a non-refundable prescribed fee through authorised payment modes.

Portfolio managers who contravene the Act, rules, regulations, or circulars and guidelines issued under them are liable to action available under securities laws or any other law in force. Regulation 42 places this liability within the procedure for action in case of default and preserves enforcement consequences authorised by applicable securities and other laws. Liability arises from such non-compliance and is not confined to a single enforcement framework.

Inspection expense recovery permits the Board to recover from a portfolio manager expenses it incurs for the purposes of inspecting or investigating that manager's books of account, records and documents. Recoverable costs include, without limitation, auditor fees paid for such inspection or investigation. The portfolio manager bears these expenses where its books, records and documents are examined or investigated by the Board.

The Board may appoint a qualified auditor, in addition to an inspecting authority, to inspect or investigate a portfolio manager's books of account or affairs. The appointed auditor exercises the powers of the inspecting authority, and the portfolio manager must comply with the applicable inspection-related obligations.

Action on inspection or investigation reports permits the Board, after considering such reports, to take measures it considers fit and appropriate. Available measures include action under securities laws or any other law in force, enabling a regulatory response to matters identified through inspection or investigation.

Regulation 38 requires the inspecting authority, in inspection and disciplinary proceedings concerning portfolio managers, to submit an inspection report to the Board as soon as possible. The obligation establishes a prompt reporting mechanism through which inspection findings are placed before the Board for consideration within the applicable regulatory and disciplinary framework.

Portfolio managers and their directors, partners, officers and employees must produce relevant books, accounts and documents, and furnish information concerning portfolio-management activities within the required time. They must permit reasonable access to relevant premises and records, including computer data, provide copies of material relevant to inspection, and facilitate examination or recording of statements. All such persons must provide reasonable assistance connected with the inspection.

Inspection procedure requires the Board to give a portfolio manager reasonable notice before an inspection. Prior notice may be dispensed with only for reasons recorded in writing where this is in the interest of investors or the public interest. During an inspection, the portfolio manager remains bound to discharge the prescribed obligations.

Inspection of portfolio managers may be undertaken by persons appointed by the Board to verify maintenance of books, records and documents, and compliance with applicable statutory and regulatory requirements. Inspection may investigate complaints concerning a portfolio manager's activities and may also be initiated on the Board's own motion in the interests of the securities market or investors.

The Board may prescribe additional conditions and restrictions for effective implementation of the portfolio manager regulatory framework, including client segregation, maintenance of records, fees, and limits on investments in associates of a portfolio manager. These conditions may apply to the portfolio management service route for investment in mutual fund units where appropriate.

A portfolio manager must not accept from a client funds, securities, or their combination valued below twenty-five lakh rupees. Renewal of a portfolio upon expiry of the initial agreement period is deemed a fresh investment and remains subject to the minimum-investment requirement.

Portfolio managers may invest client funds only in direct plans of mutual funds in India. Permissible investments include index funds, exchange traded funds and specialised investment funds.

PRIM portfolio-management registration requires adequate infrastructure, appointment of a principal officer and compliance officer, and continuous maintenance of a separate minimum net worth of two crore rupees. At least ten percent of that minimum net worth must be held in unencumbered liquid assets of prescribed kinds. The principal officer must possess prescribed educational or professional qualifications, valid relevant NISM certification, and at least two years' securities-market experience.

PRIM providers must apply for a certificate of registration and comply with conditions specified by the Board. Existing portfolio managers may be permitted to offer PRIM through segregated investment approaches, subject to the applicable regulatory conditions.

PRIM is governed by Chapter VI, while other portfolio-manager requirements and related guidelines and circulars apply mutatis mutandis unless context requires otherwise or application is repugnant to that framework. The modified application excludes specified clauses of Regulations 4, 16 and 17, Regulation 6(4), Chapters III and IV, and guidelines and circulars issued under the excluded provisions.

Disputes, claims and differences between investors and portfolio managers arising from securities-market activities must be submitted to a prescribed dispute resolution mechanism, which may include mediation, conciliation and/or arbitration. A body corporate may be recognised to handle and monitor grievance-redressal processes.

Portfolio managers must appoint a compliance officer to monitor compliance with applicable statutory and regulatory requirements, address investor grievances, and satisfy eligibility criteria specified by the Board. The role cannot be assigned to the principal officer or the employee appointed for specified portfolio-management functions. The compliance officer must immediately and independently report observed non-compliance to the Board.

Portfolio managers may be required by the Board to disclose information concerning portfolio management, changes to previously furnished information or particulars bearing on the certificate granted, names of clients whose portfolios they manage, and particulars relating to the net worth requirement. The obligation applies whenever information is sought, including information bearing on certification and net worth.

Portfolio managers must take steps to rectify deficiencies identified in an auditor's report within two months from the report's date. The obligation applies to auditor's reports specified under Regulation 23(4) and requires remediation within the prescribed period as part of the general obligations and responsibilities governing portfolio managers.