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33. (1) A portfolio manager shall enter into a written agreement with the client that clearly defines the inter se relationship and sets out their mutual
rights, liabilities and obligations relating to management of portfolio including details pertaining to investment objectives, risk factors, terms of
fees, period of the contract, etc.
(2) Notwithstanding anything contained in the agreement between the portfolio manager and the client, the funds or securities can be withdrawn
by the client before the maturity of the contract under the following circumstances, namely-
(a) voluntary or compulsory termination of portfolio management services by the portfolio manager or the client; or
(b) suspension or cancellation of the certificate of registration of the portfolio manager by the Authority; or
(c) bankruptcy or liquidation of the portfolio manager.
34. (1) A portfolio manager shall periodically furnish a report to the client in terms of the agreement between the portfolio manager and the client
which shall inter alia contain details relating to composition and value of the portfolio, transactions undertaken during the period of the report,
beneficial interest received during the period of the report, expenses incurred in managing the portfolio and details of risk relating to the securities
recommended by the portfolio manager for investment or disinvestment.
(2) The report referred to in sub-regulation (1) may be made available online with restricted access to each client.
35. The portfolio manager shall charge an agreed fee from the clients for rendering portfolio management services without guaranteeing or assuring,
either directly or indirectly, any return and the fee so charged may be a fixed fee or a return based fee or a combination of both.
36. A discretionary portfolio manager shall individually and independently manage the funds of the client in accordance with the needs of the client,
in a manner which does not partake the character of a mutual fund, whereas a non-discretionary portfolio manager shall manage the funds of the
client in accordance with the directions of the client.
37. (1) A portfolio manager shall not accept from the client, funds or securities worth less than USD 70,000.
(2) A portfolio manager shall keep the funds of all clients in a separate account to be maintained by it in a Banking Unit.
(3) A portfolio manager shall segregate each client’s holding in securities in separate accounts.
(4) The funds received from the clients, investments or disinvestments, all the credits to the account of the client like interest, dividend, bonus
or any other beneficial interest received on the investment and debit for expenses, if any, shall be properly reflected in the client’s accounts.
(5) A portfolio manager shall act in a fiduciary capacity in respect of the client’s funds and shall not derive any direct or indirect benefit out of
the client’s funds or securities.
(6) A portfolio manager shall not borrow funds or securities on behalf of the client.
38. (1) The money or securities accepted by the portfolio manager shall be invested or managed in terms of the agreement between the portfolio
manager and the client.
(2) The portfolio manager shall not leverage the portfolio of its clients for investment in derivatives, unless express consent has been obtained
from its clients.
(3) The portfolio manager shall not while dealing with clients’ funds indulge in speculative transactions i.e., it shall not enter into any transaction
for purchase or sale of any security which is periodically or ultimately settled otherwise than by actual delivery or transfer of security except
the transactions in derivatives.
(4) A portfolio manager shall, ordinarily purchase or sell securities separately for each client. However, in the event of aggregation of purchases
or sales for economy of scale, inter se allocation shall be done on a pro rata basis and at weighted average price of the day's transactions. The
portfolio manager shall not keep any open position in respect of allocation of sales or purchases effected in a day.
(5) A portfolio manager shall segregate each clients' funds and portfolio of securities and keep them separately from its own funds and securities
and be responsible for safekeeping of clients' funds and securities.
(6) The portfolio manager shall not hold the securities belonging to the portfolio account, in its own name on behalf of its clients either by
virtue of contract with clients or otherwise.
(7) A portfolio manager (except those providing only advisory services) shall appoint a custodian in respect of securities managed or
administered by it.
39. The portfolio manager shall ensure that any person or entity involved in the distribution of its services is carrying out the distribution activities
in compliance with these regulations and circulars issued thereunder from time to time.
40. The portfolio manager shall report its performance uniformly in the disclosures to the Authority, marketing materials and reports to the clients
and on its website.
41. The portfolio accounts of a portfolio manager shall be audited annually and a copy of the certificate shall be given to the client.
42. A portfolio manager shall disclose a change in the identity of the Principal Officer to the Authority and the clients within seven working days
of effecting the change.”