SEBI in its regulation has mandated annual audit which shall be conducted either by a CA or a CS. The audit shall be conducted within 6 months from the end of the financial year.
Before going ahead with the audit, you need to ensure that all the mandatory documents/information that are mentioned under the regulations are maintained and should be provided to the auditor at the time of audit.
Compliance with regulation shall not only avoid legal issues but also builds trust with clients and enhances the credibility of your research.
Here are the top 10 mandatory documents/ information that you should maintain before going ahead with the compliance:
Qualification and Certification Requirements
Make sure you and your team (whomsoever is engaged with research activities) have all the required educational qualifications and NISM Certifications. Ensure your NISM Certificate is up to date and not expired.
Maintain the necessary financial stability. For individuals/partnership firms, the minimum is Rs. 1 lakh, and for body corporate, it’s Rs. 25 lakhs. This requirement must be met at all times. The auditor shall ask the audited financials or the networth certificate duly signed by a CA to verify the compliance of this requirement.
3. Communication with SEBI
Keep SEBI informed of any significant changes affecting your registration, like changes in email, phone number, or address. Update these changes on SEBI’s portal and inform them about any other changes as well. You are required to maintain all the communication with SEBI.
4. Client Correspondences
Ensure that all client communications reflect your professional status and SEBI registration. Include the word ‘research analyst’ and your SEBI registration number and address in your communications.
5. Internal Policies and Procedures
Keep your internal policies and standard disclosures well-organized and signed. These should be readily available in your office.
6. Personal Trading Restrictions
Monitor and control personal trading to avoid conflicts of interest. Follow the 30-day prior and 5-day after trading rule when recommending trades to clients. In case you have employees, they must take approvals before trading in securities.
7. Maintenance of Research Report
The research reports shall have all the necessary disclosures and disclaimers along with the detailed analysis. You should ensure to have a proper documentary basis, supported by your research.
To read what all you need to disclose in your research report, click here .
8. Investor Charter and Complaints Table
Make sure the investor charter and complaints table are visible on your website to ensure transparency and easy access to investor information.
9. Maintenance of records
You are required to maintain the records of research reports duly signed and dated, research recommendations, rationale of research recommendation and records of public appearance.
These records shall be maintained for a period of 5 years and shall be maintained in physical or can be digitally signed.
10. Advertisement Code Details
You are required to maintain the details of advertisement made during the audit period and need to ensure that you are complying with the requirements of the advertisement code.
To read about the Do’s and Don’ts of Advertisement Code, Click Here
Apart from the above mandatory points, in case you are a body corporate you need to ensure to have a compliance officer in the company who shall be responsible to manage the compliances required under the regulation and the compensation of the research analyst should be approved by the Board of Directors of the Company.
If you are a SEBI registered Research Analyst, it’s a mandatory audit for you.
Reach out to your concerned professional before the due dates and complete it within the timeline.
Reach out to us at anjalibansalcs@gmail.com , if you have any queries or looking to have the audit done as per the regulations.
Σχόλια