Research Analysts (RAs) are required to disclose comprehensive terms and conditions to clients and obtain their consent. This is a critical client protection measure that ensures transparency and sets clear expectations. This article provides a comprehensive technical analysis of terms and conditions disclosure requirements for RAs.
Regulatory Basis
Primary Provision: Regulation 24(6)
Regulation 24(6) provides that:
"A research analyst or research entity shall disclose to the client the terms and conditions as may be specified by the Board and take consent of the client on such terms and conditions in such manner as may be specified by the Board."
Master Circular Reference
The Master Circular for Research Analysts dated February 06, 2026 (Annexure-B) specifies the minimum mandatory terms and conditions.
What Must Be Disclosed
1. Availing the Research Services
- Client confirms they have elected to subscribe to research services.
- RA confirms services shall be rendered in accordance with RA Regulations.
2. Obligations on RA
- RA and client bound by SEBI Act and all applicable rules and regulations.
- Includes RA Regulations and relevant government notifications.
3. Client Information and KYC
- Client must furnish all required details.
- RA shall collect, store, upload, and check KYC records with KRA.
4. Standard Terms of Service
- Client acknowledgment of understanding the terms and conditions.
- Client understanding that investments are subject to market risk.
- No assurance of returns.
- No recourse for losses.
5. Consideration and Mode of Payment
- Client must pay agreed fees.
- Fees payable through specified manner and mode(s)/mechanism(s).
6. Risk Factors
- Standard risks associated with investment in securities.
- To be added by RA under this clause.
7. Conflict of Interest
- RA shall adhere to applicable regulations on conflict of interest.
- Mandatory disclosures to be added by RA.
8. Termination of Service and Refund of Fees
- Suspension/cancellation of registration.
- Refund of residual amount.
- Pro-rata refund for suspension exceeding 60 days or cancellation.
9. Grievance Redressal and Dispute Resolution
- Escalation to designated person/employee.
- Resolution within 7 business working days.
- Arbitration or other modes as specified.
10. Additional Clauses
- Should not contravene SEBI rules/regulations/circulars.
- Changes preceded by 15 days' notice.
11. Mandatory Notice
- Clients requested to go through Do's and Don'ts.
- As specified in SEBI Master Circular.
12. Most Important Terms and Conditions (MITC)
- Standardized by Industry Standards Forum (ISF) in consultation with SEBI and RAASB.
13. Optional Centralised Fee Collection Mechanism
- Guidance on CeFCoM available to clients.
Timing of Disclosure
| Scenario | Timing |
|---|---|
| New Clients | Before providing research services |
| Existing Clients | By June 30, 2025 or upon renewal |
| Material Changes | As soon as possible |
Consent Requirement
Mode of Consent
Consent may be obtained through:
- Physical signature.
- DigiLocker enabled Aadhaar based e-signature facility.
- Any other legally acceptable mode.
When Consent is Required
- Before providing any research service.
- Before charging any fee.
For Institutional Investors/QIBs
- Disclosure is required.
- Consent by signature is not mandatory.
Consequences of Non-Compliance
1. Regulatory Action
SEBI may take action under Regulation 32.
2. Invalid Services
Research services without proper terms and conditions may be invalid.
3. Fee Collection Issues
Fees charged without proper terms may be contested.
4. Client Complaints
Clients may raise complaints about inadequate disclosure.
Common Compliance Gaps
1. Incomplete Terms
Some RAs do not include all mandatory terms.
Solution: Use the standard terms from Annexure-B.
2. Not Obtaining Consent
Some RAs provide services without obtaining consent.
Solution: Obtain consent before providing services.
3. Delayed Disclosure
Some RAs delay disclosure until after services are provided.
Solution: Disclose terms before providing services.
4. No MITC
Some RAs do not include MITC in terms.
Solution: Include standardized MITC.
Conclusion and How Anuj Desai & Associates Can Help
Terms and conditions disclosure is a critical compliance obligation. Proper disclosure protects both the RA and the client.
Anuj Desai & Associates offers specialized services to help RAs comply with terms and conditions requirements:
- Review of terms and conditions documentation.
- Guidance on mandatory disclosures.
- Assistance with consent collection.
- Compliance audit and advisory.
Contact us today to ensure your terms and conditions comply with SEBI requirements. Our team will review your documentation and provide a tailored compliance roadmap.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Readers are advised to consult qualified professionals for legal and compliance matters. Anuj Desai & Associates is a SEBI compliance consulting firm based in India.