Overview: The Securities and Exchange Board of India (SEBI) has notified the Portfolio Managers Regulations, 2026, replacing the 2020 framework from 1 April 2027. The new rules revise registration and compliance requirements and provide for wider investment options. They also introduce the Portfolio Management Service Route for Investment in Mutual Fund units (PRIM), with a separate eligibility framework. Portfolio managers should review the new provisions and prepare for the transition.
The Securities and Exchange Board of India (SEBI) notified the Securities and Exchange Board of India (Portfolio Managers) Regulations, 2026, on 7th October 2026. The new framework sets out the registration, operational and general obligations of portfolio managers.
The regulations, which will take effect on 1st April 2027, cover investment flexibility, client disclosures, eligibility requirements and investor protection. Existing portfolio managers and firms planning to enter this business should review the new requirements before they take effect on 1 April 2027.
SEBI Portfolio Managers Regulations 2026: What Has Changed?
The new regulations replace the Securities and Exchange Board of India (Portfolio Managers) Regulations, 2020. They retain the core registration and investor-protection framework while providing for different categories of portfolio management services.
The rules cover regular portfolio managers, eligible fund managers and co-investment portfolio managers. A separate chapter establishes Portfolio Management Service Route for Investment in Mutual Fund (PRIM), a route for portfolio management services focused on mutual fund units.
The changes are relevant to firms seeking registration as well as those already operating under SEBI’s portfolio management framework. However, the provisions do not all apply in the same way to every category. Portfolio managers must identify the requirements that apply to their particular activities.
Registration and Net Worth Requirements
An entity seeking to operate as a portfolio manager must apply to SEBI in the prescribed form. The application must include the required fee and information. SEBI may seek further details or clarification before deciding the application.
Applicants must meet the eligibility conditions under Regulation 4. These include adequate infrastructure, qualified personnel and a minimum net worth of ₹5 crore. At least 10% of the minimum net worth must be maintained in unencumbered liquid assets.
The principal officer must meet the prescribed educational, certification and experience requirements. The applicant must also appoint the required personnel and establish the arrangements needed to conduct portfolio management activities.
The financial conditions do not end with registration. A portfolio manager must maintain the prescribed net worth throughout the validity of its registration. Firms should therefore assess both their initial eligibility and their ability to meet the ongoing requirements.
The First Schedule specifies the following fees:
- Application fee: ₹1 lakh
- Registration fee: ₹10 lakh
- Renewal fee: ₹5 lakh, payable every three years
The application fee is non-refundable. Applicants should account for these amounts when planning a new portfolio management business.
Investment Options and Client Investment Limits
The regulations set out the securities and instruments in which portfolio managers may invest or advise clients to invest, subject to the applicable conditions. These include equity securities offered through an initial public offer, primary-market debt issues, listed securities, money market instruments and mutual fund units.
The framework also provides for investments in foreign securities and unlisted securities, subject to the limits and conditions specified by SEBI. This gives portfolio managers a broader framework for managing client portfolios. It does not mean that every investment is automatically permitted without restrictions.
The minimum investment requirement for regular portfolio management services remains ₹50 lakh per client. An exception applies to accredited investors, subject to appropriate disclosures and agreed terms.
Existing investments that fall below the prescribed minimum must be brought into compliance within 12 months from commencement of the new regulations. A renewal of the portfolio after the initial agreement ends is treated as a fresh investment.
Portfolio managers should review client-level holdings and agreements well before the transition period expires. They should also check whether any proposed investment strategy requires additional controls or disclosures.
PRIM: A Separate Route for Mutual Fund Investments
One of the key additions is the Portfolio Management Service Route for Investment in Mutual Fund (PRIM) units. It creates a specific regulatory route for portfolio managers offering services focused on mutual fund investments.
The minimum investment under PRIM is ₹25 lakh, lower than the ₹50 lakh threshold for regular portfolio management services. The framework also sets a separate minimum net worth of ₹2 crore for an applicant offering PRIM exclusively. At least 10% of that minimum net worth must be held in unencumbered liquid assets.
The lower threshold does not remove the need for registration or regulatory oversight. PRIM applicants must meet the conditions specified for this route, including infrastructure, key appointments and applicable investment restrictions.
Existing portfolio managers may also be permitted to offer PRIM through separate investment approaches, subject to SEBI’s conditions. Firms considering this route should assess the registration requirements and the need to keep activities and client arrangements appropriately separated.
PRIM should not be treated as interchangeable with regular portfolio management services. The two routes have different eligibility and investment requirements, and firms must structure their offerings accordingly.
Client Disclosures and Investor Protection
The regulations place clear responsibilities on portfolio managers when dealing with clients. Before taking on a portfolio management assignment, a manager must enter into a written investment agreement with the client. The agreement must set out the parties’ rights, liabilities and obligations.
A disclosure document must also be provided in digital format before the agreement is entered into. It must explain matters such as fees, portfolio risks, related-party transactions, conflicts of interest, diversification policy and the manager’s performance. The Disclosure Document must include the portfolio manager’s audited financial statements for the preceding three years. Its contents must be certified by an independent chartered accountant in the prescribed format.
Portfolio managers must update disclosure documents annually within six months from the end of the financial year. A material change requires an addendum and filing with SEBI within 15 calendar days. Clients must also be informed of the material change within the prescribed period.
The regulations prohibit portfolio managers from charging upfront fees, directly or indirectly. Fees must be agreed with clients and disclosed. Portfolio managers must not guarantee or assure investment returns.
Investor grievances must be addressed within 21 calendar days of receipt. The rules also require client-wise segregation of funds and securities, proper accounting, periodic portfolio reporting and annual audit arrangements.
These obligations make documentation and record-keeping central to day-to-day compliance. Firms should ensure that their agreements, disclosure documents, reporting processes and internal controls reflect the new framework.
Transition to the New Framework
The SEBI (Portfolio Managers) Regulations, 2026, come into force on 1st April 2027. They also contain savings provisions to protect specified rights, obligations, liabilities, penalties and proceedings arising under the earlier framework. References to the repealed 2020 regulations in other SEBI regulations, guidelines and circulars are to be read against the corresponding provisions of the new regulations.
Existing portfolio managers should not assume that every current process will remain suitable after commencement. They should review their net worth, client investment amounts, disclosure documents, investment policies, reporting arrangements and compliance responsibilities.
Firms planning to apply for registration should also review the eligibility conditions and fee structure before submitting an application. Where a business intends to offer PRIM or operate under a specialised category, it should assess the relevant chapter separately.
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FAQs
The regulations will take effect on 1st April, 2027.
The prescribed minimum net worth is ₹5 crore, including at least 10% in unencumbered liquid assets.
The minimum investment is ₹50 lakh per client. An exception applies to accredited investors, subject to the required disclosures and agreed terms.
PRIM stands for Portfolio Management Service Route for Investment in Mutual Fund units. It has a separate framework, including a ₹25 lakh minimum investment and a ₹2 crore minimum net worth for applicants offering PRIM exclusively.
The existing portfolio managers should review their eligibility, client investments, agreements, disclosures, investment policies and reporting processes. They should also identify any changes needed to meet the new requirements from commencement.
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