Portfolio manager registration and net worth
Only a body corporate with at least ₹5 crore of net worth, kept at all times, can register.
No one may act as a portfolio manager without a certificate of registration from SEBI (Reg 3). Only a body corporate can apply, it must have a net worth of at least ₹5 crore, and its principal officer must meet qualification, experience and certification tests. Once granted, the certificate stays valid until SEBI suspends or cancels it; there is no fixed expiry, but a renewal fee keeps it in force.
A distributor needs this for two reasons. Checking that a PM is registered is the first step of any due diligence, and XXI-A asks the numbers directly.
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What SEBI checks before registering a PM (Reg 7(2))
- checkThe applicant is a body corporate.
- checkIt has adequate office space, equipment and staff to run portfolio management.
- checkIt has appointed a compliance officer, who cannot also be the principal officer (Reg 34).
- checkIts principal officer meets the qualification, experience and NISM certification tests below.
- checkBesides the principal officer and compliance officer, it employs at least one graduate with two years' experience in related securities market activity.
- checkNo disciplinary action against connected persons, no adverse securities litigation, no conviction for moral turpitude or economic offences.
- checkIt meets the ₹5 crore net worth requirement (Reg 9) and is a fit and proper person.
People requirements
Principal officer
Qualification
Professional qualification in finance, law, accountancy or business management, or NISM's one-year PG programme in portfolio management, or a CFA charter
Experience
At least 5 years in related securities market activity, of which at least 2 in portfolio management, investment advisory or fund management
Certification
NISM-Series-XXI-B
Employees with fund-management decision authority
Qualification
Same as principal officer
Experience
Same as principal officer
Certification
NISM-Series-XXI-B, within one year of joining if hired after September 7, 2021
One further employee
Qualification
Graduation
Experience
At least 2 years in related activities
Certification
Not specified in Reg 7(2)(e)
Distributors engaged by the PM
Qualification
None prescribed
Experience
None prescribed
Certification
NISM-Series-XXI-A
| Role | Qualification | Experience | Certification |
|---|---|---|---|
| Principal officer | Professional qualification in finance, law, accountancy or business management, or NISM's one-year PG programme in portfolio management, or a CFA charter | At least 5 years in related securities market activity, of which at least 2 in portfolio management, investment advisory or fund management | NISM-Series-XXI-B |
| Employees with fund-management decision authority | Same as principal officer | Same as principal officer | NISM-Series-XXI-B, within one year of joining if hired after September 7, 2021 |
| One further employee | Graduation | At least 2 years in related activities | Not specified in Reg 7(2)(e) |
| Distributors engaged by the PM | None prescribed | None prescribed | NISM-Series-XXI-A |
Worked example: is the net worth enough?
Reg 9 defines net worth as paid-up equity capital plus free reserves (excluding revaluation reserves), minus accumulated losses and deferred expenditure not written off.
- 1
The balance sheet
Paid-up equity ₹4 crore, free reserves ₹1.8 crore, revaluation reserve ₹1 crore, accumulated losses ₹0.6 crore, deferred expenditure not written off ₹0.3 crore.
- 2
Apply the definition
₹4 crore plus ₹1.8 crore, minus ₹0.6 crore and ₹0.3 crore, gives ₹4.9 crore. The revaluation reserve is excluded.
- 3
Result
₹4.9 crore is below ₹5 crore. The firm does not qualify, and an existing PM in this position would breach Reg 11(e), which requires the net worth to be maintained at all times.
Free account, this exam preselected.
Fees and conditions after registration
- check_circleFees (Schedule II): ₹1 lakh non-refundable with the application, ₹10 lakh on grant, and ₹5 lakh every three years to keep the registration in force.
- check_circleNet worth of ₹5 crore maintained at all times, separately from any capital adequacy needed for other SEBI-registered activities (Reg 9, 11(e)).
- check_circlePrior SEBI approval for a change in control (Reg 11(aa)).
- check_circleInvestor grievances redressed within 21 calendar days (Reg 11(d), 34A).
- check_circleA change of principal officer disclosed to SEBI and clients within 7 working days (Reg 22(9)).
- check_circleCo-investment portfolio managers are exempt from the net worth requirement and some staffing rules.
Proposed, not yet law
SEBI's Board approved new Portfolio Managers Regulations on September 24, 2026 that would let a graduate act as principal officer and create a separate mutual-fund-only registration with ₹2 crore net worth. Until they are notified, the ₹5 crore net worth and the principal officer tests above apply.
How XXI-A tests this
Numbers first: ₹5 crore net worth, 5 years' experience for the principal officer with 2 in portfolio management or related work, 21 days for grievances. Then the which-certification question: fund managers and the principal officer need XXI-B, distributors need XXI-A. A favourite trap includes the revaluation reserve in net worth, or treats net worth as an entry test only rather than something maintained throughout. Another offers a sole proprietor as an eligible applicant; only a body corporate qualifies.
FAQs
What is the net worth requirement for a portfolio manager?expand_more
At least ₹5 crore, maintained at all times while registered. Net worth excludes revaluation reserves and is reduced by accumulated losses and deferred expenditure not written off.
Which NISM certification does a PMS fund manager need?expand_more
NISM-Series-XXI-B (Portfolio Managers). The principal officer and every employee with fund-management decision authority need it. Distributors need XXI-A.
Does PMS registration with SEBI expire?expand_more
No. The certificate is valid until suspended or cancelled, but the PM pays ₹5 lakh every three years to keep it in force.
Can the compliance officer of a PMS also be the principal officer?expand_more
No. Regulation 34 bars assigning the compliance officer's role to the principal officer, except for co-investment portfolio managers.