On July 2, 2021, the Securities and Exchange Board of India (“SEBI”) issued an informal guidance (“Informal Guidance”) in connection with the SEBI (Investment Advisors) Regulations, 2013 (“IA Regulations”) in response to a request from Waterfield Financial and Investment Advisors Private Limited ("Waterfield"). Waterfield is an investment advisor registered with SEBI.

Waterfield had requested an informal guidance on the following queries- 

1. Whether Waterfield's clients can, at their volition, grant a power of attorney (“POA”) to Waterfield, authorising Waterfield to make inquiries and liaise with the custodian concerning the client's account with the custodian and in relation to the client’s investments, after receiving the written consent and instructions from the client; and
2. Whether the above arrangement between Waterfield and its clients would be considered as 'implementation services' under the IA Regulations.

SEBI considered the definition of investment advisors under Regulation 2(1)(m) of the IA Regulations and held that the role of the investment advisor is to render investment advice to its clients and did not include managing funds or securities on their behalf. SEBI held that grant of a POA has neither been envisaged nor appeared desirable for an IA considering the scope of the activities allowed to be undertaken by an investment advisor under the IA Regulations.  

Please find a copy of the Informal Guidance here.

This update has been contributed by Adity Chaudhury (Partner) and Aditi Gupta (Associate). 

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