The compliance year that starts the day your registration is granted

Registration is the part people plan for. The recurring obligations are the part that gets discovered in the second year, usually by someone realising in September that an audit was due.

The annual compliance audit

Both registrations carry an annual audit on compliance with their own regulations, under regulation 19(3) for advisers and regulation 25(3) for analysts. The report has to specify each provision of the regulations and of the circulars and guidelines issued under them on which compliance is being reported.

• Complete the audit within six months from the end of the financial year.
• Submit the compliance audit report to IAASB or RAASB and SEBI within one month of the date of the audit report.
• Submit adverse findings with the action taken, approved by you or by management, within one month of the report date and no later than 31 October each year for the previous financial year.
• Publish the status of the audit report on your website, publish any adverse findings with the action taken, and give the report to your clients.

That last item is the one advisers underestimate. Your own adverse audit findings go on your public website. The additional audit requirements applied starting with the report for the financial year ending 31 March 2025.

The segregation certificate

Separately from the audit, you keep on record an annual certificate from a member of ICAI, ICSI or ICMAI, or from an auditor, confirming compliance with client-level segregation. For a non-individual analyst or research entity it comes from the statutory auditor. It is obtained within six months of the financial year end and forms part of the compliance audit.

Records, and how long they live

A Research Analyst keeps records of interactions with all clients, including prospective clients before onboarding, wherever a conversation about the services took place. Physical records signed by the client, telephone recordings, email from a registered address, SMS records, or any other legally verifiable record. They begin at the first interaction and run to the completion of the service.

Retention is five years. Where a dispute has been raised, records are kept until it is resolved, or longer if SEBI asks. Call recording is not required where the interaction leaves a digital footprint anyway, such as email.

For advisers giving implementation or execution services, every client consent obtained over a telephone call has to be recorded, and all such communications time stamped to keep a clear audit trail. Consent given by email sits on par with a call recording.

Agreements, MITC and consent

An adviser enters into an investment advisory agreement that includes the Most Important Terms and Conditions. One term is prescribed word for word by SEBI:

An analyst discloses the terms and conditions of research services, including MITC, and takes the client's consent. No research service may be rendered and no fee charged until that consent is received. Consent can be signed in person or through any legally acceptable mode, including the DigiLocker Aadhaar e-signature facility. For institutional investors and qualified institutional buyers, disclosure is required but consent by signature is not.

Deadlines that repeat every year

Disclosures people forget

• An adviser using AI tools is solely responsible for the security, confidentiality and integrity of client data and for advice based on AI output, and must disclose the extent of AI use to the client. Analysts carry the same obligation.
• An adviser displays its complete registered name, type of registration, whether it is a part-time registration, registration number and validity, full address with telephone numbers, principal officer contact details, and the corresponding SEBI regional office address, on the website, app, printed material, KYC forms, client agreements and correspondence.
• Complaint status has to sit on the homepage without scrolling, in font size 12 or above, updated monthly within seven days of the previous month's end.
• A non-individual adviser cannot run one marketing campaign across advisory and its other activities. The regulations require an arm's-length relationship and clear segregation, which extends to how you advertise.

Where analysts differ

Trading restrictions under regulation 16 are the analyst-specific burden. No dealing in a security you recommend or follow within 30 days before and 5 days after publication of a research report on the subject company. No trading contrary to your own recommendation. No buying an issuer's pre-IPO securities where that issuer is principally in the same line of business as companies you follow. The restrictions extend to associates and to individuals employed as research analysts, and analysts and research entities have to monitor and record the personal trading of the people they employ.

Analysts recommending a model portfolio have a further framework to meet, covering the factsheet, methodology, labelling, investment horizon and review frequency, and compliance with it forms part of the annual audit.