Management or administration of clients' portfolio

(1) Investment Rules and Limits: (a) The money or securities accepted by the portfolio manager shall be invested or managed by the portfolio manager as per the agreement with the client. (b) The portfolio manager shall invest and advise for investment of funds of its clients in initial public offer for equity securities, primary market issuance for debt securi ties, securities listed or traded on a recognized stock exchange, money market instruments, units of Mutual Funds and other securities as specified by Board from time to time, on behalf of their clients. (c) The discretionary and non–discretionary portfolio manager shall invest funds of its clients in such foreign securities and in such manner as maybe specified by the board from time to time. (d) The portfolio manager offering discretionary or non–discretionary or advisory services to the clients may invest or adv ise for investment in unlisted securities, subject to limits and conditions as may be specified by the Board from time to time. (e) The portfolio manager offering discretionary or non–discretionary or advisory services to the clients may invest or advise for investment in exchange traded derivative instruments, subject to limits and conditions as may be specified by the Board from time to time. (f) The portfolio manager may offer discretionary or non–discretionary or advisory services for investment up to hundred percent of the assets under management of the large value accredited investors in unlisted securities, subject to appropriate disclosures in the disclosure document and the terms agreed between the client and the portfolio manager. (g) The portfolio manager may invest in mutual funds only through direct plans and shall not charge any kind of distribution related fees to the client. (h) The portfolio manager shall ensure compliance with prudential limits as specified by the Board at the client level. (i) The portfolio manager shall not be allowed to invest clients’ funds in unrated securities of its related parties or associates. (j) The portfolio manager shall put in place an alert based system to monitor compliance with the prudential limits on investments. (k) The portfolio manager shall ensure investment of its clients’ funds on the basis of the credit rating of securities as specified by the Board. (l) The portfolio manager shall ensure that all investments made prior to commencement of Securities and Exchange Board of India (Po rtfolio Managers) Regulations, 2020, shall comply with the requirements provided in clause ( h), ( i) and (k ) of this sub–regulation within thirty–six months of commencement of these regulations. (m) The requirements provided in clause ( h), (i), (j) and (k) shall not apply to such portfolio manager as maybe specified by the Board. (2) Restriction on certain activities of portfolio managers (a) The portfolio manager shall not – i. deploy the clients' funds in bill discounting, badla financing or for the purpose of lending or placement with corporate or non–corporate bodies; ii. invest the clients’ funds in the portfolio managed or administered by another portfolio manager; iii. invest client’s fund based on the advice of any other entity except as permitted for independent fund manager; iv. indulge in speculative transactions, while dealing with clients’ funds, i.e, it shall not enter into any transaction for purchase or sale of any security which is periodically or ultimately settled otherwise than by actual delivery or transfer of security except the transactions in derivatives; v. hold the securities belonging to the portfolio account, in its own name on behalf of its clients either by virtue of contract with clients or otherwise. (3) Trading and Transfer (a) The portfolio manager shall, ordinari ly purchase or sell securities separately for each client. (b) In the case of aggregation of purchases or sales for economy of scale, inter se allocation shall be done on a pro rata basis and at weighted average price of the day's transactions. (c) The portfolio manager shall not keep any open position in respect of allocation of sales or purchases effected in a day. (d) The portfolio manager shall not execute off market transfers in client’s account except – i. for settlement of the clients’ own trades; ii. for providing margin/ collateral for clients’ own positions; iii. for dealing in unlisted securities in accordance with these regulations; iv. with specific consent of the client for each transaction; v. for any other reason specified by the Board from time to time. (e) The portfolio manager shall segregate each clients' funds and portfolio of securities a nd keep them separately from its own funds and securities and be responsible for safekeeping of clients' funds and securities, subject to such conditions and in the manner as specified by the board. (f) The requirement specified in clause (e) of this sub–regulation shall not apply to short term deployment of client’s funds by the portfolio manager in liquid mutual funds for the purpose of cash management, subject to the restrictions as may be specified by the Board. (g) The portfolio manager may, subject to authorization by the client in writing, participate in securities lending. (4) Early Withdrawal: (a) The client has the right to withdraw funds and securities before the maturity of the contract, irrespective of the terms of the agreement, under following circumstances: i. voluntary or compulsory termination of portfolio management services by the portfolio manager or the client; ii. suspension or cancellation of the certificate of registration of the portfolio manager by the Board; or iii. bankruptcy or liquidation of the portfolio manager.