SEBI Relaxes Advance Fee Restrictions for Investment Advisers and Research Analysts

The Securities and Exchange Board of India (Sebi) has relaxed rules for investment advisers and research analysts, permitting them to charge advance fees for up to one year. Previously, advisers could charge for two quarters, while analysts could only charge for one quarter. These changes address concerns over previous fee limitations.

The Securities and Exchange Board of India (Sebi) has announced a significant change, permitting investment advisers and research analysts to collect advance fees for a period of up to one year. This move extends the previous limitations, which allowed advisers to charge for two quarters and analysts for just one quarter.

The decision allows more flexibility for advisers and analysts working with individual and Hindu Undivided Family (HUF) clients, excluding accredited investors. This change comes after feedback suggesting that previous rules deterred the provision of long-term recommendations. Advance fees for institutional and accredited investors remain negotiable through bilateral agreements.

Effective immediately, these new guidelines address long-standing industry concerns, providing a much-needed boost for professionals aiming to offer extended services. The decision follows representations received by Sebi after amendments to the Research Analysts norms in December 2024, which had limited advance fee collection.

(With inputs from agencies.)