The Compliance Officer is a critical functionary for any SEBI-registered Portfolio Manager. This article provides a comprehensive overview of the Compliance Officer requirements, eligibility criteria, and responsibilities under the SEBI (Portfolio Managers) Regulations, 2020.
The Regulatory Mandate
Statutory Requirement
Every portfolio manager shall appoint a compliance officer who shall be responsible for monitoring the compliance of the SEBI Act, rules and regulations, notifications, guidelines, instructions, etc., issued by SEBI or the Central Government and for redressal of investors' grievances.
Separation from Principal Officer
The role of compliance officer shall not be assigned to the Principal Officer appointed in terms of clause (d) of sub-regulation (2) of regulation 7 or the employee of the portfolio manager appointed in terms of clause (e) of sub-regulation (2) of regulation 7.
Eligibility Criteria
Professional Qualifications
The Compliance Officer must be a qualified professional. Eligibility includes membership of:
- Institute of Chartered Accountants of India (ICAI)
- Institute of Company Secretaries of India (ICSI)
- Institute of Cost Accountants of India (ICMAI)
Senior Officer Designation
The portfolio manager shall designate a senior officer as the Compliance Officer. The Compliance Officer shall coordinate with regulatory authorities and provide necessary guidance as also ensure compliance internally.
NISM Certification
The Compliance Officer must have successfully completed the NISM-Series-III-A: Securities Intermediaries Compliance (Non-Fund) Certification Examination.
Responsibilities of the Compliance Officer
Regulatory Compliance Monitoring
The Compliance Officer is responsible for monitoring compliance with:
- The SEBI Act, 1992
- Rules and regulations framed thereunder
- Notifications, guidelines, and instructions issued by SEBI
- Guidelines issued by the Government of India
- Guidelines issued by other regulatory authorities
Investor Grievance Redressal
The Compliance Officer is responsible for redressal of investors' grievances. This includes:
- Ensuring timely resolution of complaints
- Monitoring complaint trends
- Implementing corrective measures
Ensuring Non-Recurrence of Deficiencies
The Compliance Officer shall inter alia ensure that the observations made or the deficiencies pointed out by SEBI in the functioning of the portfolio managers do not recur.
Reporting to SEBI
The Compliance Officer shall immediately and independently report to SEBI any non-compliance observed by him.
Internal Compliance Reviews
The Compliance Officer shall ensure that:
- Internal policies are implemented effectively
- Regulatory changes are incorporated into operations
- Staff are trained on compliance requirements
Co-Investment Portfolio Manager Exception
In case of the Co-investment Portfolio Manager, the role of compliance officer may be assigned to the Principal Officer appointed in terms of clause (d) of sub-regulation (2) of regulation 7.
Compliance with Master Circular
The Master Circular for Portfolio Managers requires that with a view to ensuring that all Rules, Regulations, Guidelines, Notifications, etc., issued by SEBI, the Government of India and other regulatory authorities are complied with, the Portfolio Manager shall designate a senior officer as Compliance Officer.
Consequences of Non-Compliance
Impact on Registration
Failure to appoint a qualified Compliance Officer can result in:
- Rejection of registration application
- Suspension or cancellation of existing registration
Regulatory Action
Non-compliance with Compliance Officer requirements can lead to enforcement action by SEBI.
Expert Legal Guidance
Anuj Desai & Associates provides expert legal advisory services on Compliance Officer appointment and compliance for portfolio managers. Our securities law experts help clients understand eligibility requirements, ensure proper appointment, and maintain ongoing compliance. Contact us for guidance on Compliance Officer and other regulatory matters.