SEBI (Portfolio Managers) Regulations, 2026: A Comprehensive Overview of the New Framework
The Securities and Exchange Board of India has issued the Securities and Exchange Board of India (Portfolio Managers) Regulations, 2026, through a formal notification dated 7 October 2026 (F. No. SEBI/LAD-DOP/2026/322). These regulations, framed under Section 30(1) read with Section 11(1), Section 11(2)(b) and Section 12(1) of the Securities and Exchange Board of India Act, 1992 (15 of 1992), will come into force on 1 April 2027, replacing the earlier regulatory architecture governing portfolio management services in India. The framework is comprehensive, addressing everything from initial registration to ongoing compliance, client protection, and supervisory oversight.
Chapter I: Preliminary Provisions and Key Definitions
Legislative Foundation and Commencement
The regulations are titled the Securities and Exchange Board of India (Portfolio Managers) Regulations, 2026 and shall become operative with effect from 1 April 2027. All entities seeking to conduct portfolio management activities must align their operations with this framework before that date.
Important Definitions
The regulations establish a precise definitional framework. Key terms include:
"Accredited Investor" — carries the meaning assigned under
regulation 2(1)(ab)of the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012."Alternative Investment Fund" — as defined under
regulation 2(1)(b)of the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012."Associate" — in relation to a portfolio manager, refers to:
- A body corporate where a director or partner of the portfolio manager holds, individually or collectively, more than twenty percent of its paid-up equity share capital or partnership interest; or
- A body corporate that holds, individually or collectively, more than twenty percent of the paid-up equity share capital or partnership interest of the portfolio manager.
"Body Corporate" — as defined under
Section 2(11)of the Companies Act, 2013 (18 of 2013)."Change in Control":
- For listed companies: with reference to
regulation 2(1)(e)of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations, 2011. - For unlisted companies: with reference to
Section 2(27)of the Companies Act, 2013 (18 of 2013).
- For listed companies: with reference to
"Chartered Accountant" — as defined under
section 2(1)(b)of the Chartered Accountants Act, 1949 (38 of 1949), who has obtained a certificate of practice undersection 6(1)of that Act."Co-investment Portfolio Manager" — a Portfolio Manager who serves as Manager of a Category I or Category II Alternative Investment Fund and:
- Renders services exclusively to investors of such funds; and
- Invests only in unlisted securities of investee companies where such funds make investments.
Provided that services may also be extended to investors of other Category I or II AIFs managed by the same entity and sponsored by the same Sponsor(s).
"Discretionary Portfolio Manager" — one who exercises complete discretion over investment decisions under a portfolio management contract.
"Eligible Fund Manager" and "Eligible Investment Fund" — carry the meanings assigned under
section 9(12)of the Income-tax Act, 2025 (30 of 2025)."Independent Fund Manager" — a fund manager who manages client portfolios in affiliation with a registered portfolio manager, in accordance with Board-specified terms.
"Investment Agreement" — a legally binding contract between the client and portfolio manager setting out mutual rights, liabilities, obligations and authority relating to portfolio management.
"Large Value Accredited Investor" — an accredited investor who has entered into an agreement with the portfolio manager for a minimum investment amount of ten crore rupees.
"Net Worth" — the aggregate value of paid-up equity capital, securities premium account and free reserves (excluding revaluation reserves), reduced by accumulated losses, deferred expenditure, miscellaneous expenditure not written off, and any loans and advances given by the Portfolio Manager including to related parties or associates.
"Non-Discretionary Portfolio Manager" — one who manages client funds strictly in accordance with the client's own directions.
"Portfolio" — the total holdings of securities and goods belonging to any person.
"Portfolio Manager" — a body corporate which, pursuant to a contract with a client, advises, directs or undertakes — whether as a discretionary portfolio manager or otherwise — the management or administration of a portfolio of securities, goods or funds of the client.
Provided that a Portfolio Manager may deal in goods received in delivery against physical settlement of commodity derivatives.
"PRIM" (Portfolio Management Service Route for Investment in Mutual Fund units) — an investment approach meeting the requirements prescribed under Chapter VI of these regulations.
"Principal Officer" — a designated employee responsible for investment decisions and all operational matters of the portfolio manager.
"Related Party" — covers directors, partners, key managerial personnel and their relatives, associated firms, companies and body corporates as detailed in the regulations. Promoter group members and any entity holding ten percent or more equity shares in a listed entity are deemed related parties.
"Scheduled Commercial Bank" — any bank included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934).
"Sponsor" — as defined under
regulation 2(1)(w)of the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012.
Undefined terms shall carry the meanings assigned to them under the Securities and Exchange Board of India Act, 1992, the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Depositories Act, 1996 (22 of 1996), the Companies Act, 2013 (18 of 2013) or rules and regulations thereunder.
Chapter II: Registration Process for Portfolio Managers
Application and Fee Requirements
Any entity intending to act as a portfolio manager must submit an application to SEBI in the prescribed form, accompanied by a non-refundable application fee as set out in the First Schedule.
Key procedural points include:
- SEBI may seek additional information or clarifications before processing the application.
- Incomplete applications are liable to rejection, though applicants must be given not less than thirty calendar days to rectify deficiencies before any rejection is made.
- Upon satisfaction of eligibility criteria, SEBI will issue an intimation to the applicant.
- The applicant must pay the registration fee (as per the First Schedule) within thirty calendar days of receiving this intimation.
- The certificate of registration, once granted, remains valid unless suspended or cancelled by SEBI.
Eligibility Criteria Under Regulation 4
SEBI evaluates applications against a multi-dimensional checklist: