Step-by-Step SEBI License Approval Process Explained

Hello everyone as I promised, today we are going to have a detailed discussion with a consultant who has helped many SEBI registered RA's to become RA's and at the same time their post registration compliance she has also handled it very well so welcome Anjali a qualified company secretary and a SEBI registered consultant it's an honour to have you on YouTube channel. 

Thank you so much Sheetal for having me today thank you Anjali thank you for joining once again so this discussion we are going to have in two parts as I already said in one of our videos that we are going to have in two parts 

Divide In the first part we are going to discuss about the process of SEBI registration and in the second part which is coming here we will discuss about the entire business model of SEBI RA and the compliances that come after registration. So, without wasting much time, shall we start Anjali with the first question.

Why is it for us to get SEBI registered now What is SEBI without registration we can do recommendation business? 

So Sheetal without SEBI registration you can do whatever advisory service Say  recommendations,buy sell hold recommendation, you cannot whoever has SEBI registration, whoever has to give recommendations to you know market research report Issue buy sell hold recommendation Now when amendment came in January, SEBI has also put intraday and ultra intraday So if anyone wants to provide such service then mandatorily they need SEBI registration, then they will have to get themselves registered as a research analyst. okay and if someone suppose wants to give advisory, then they have to SEBI registered investment Advisor You will have to register yourself if someone means those who are providing services without registration then SEBI will consider them as unregistered intermediary trade and it is high chances that inspection may happen and if inspection happens then there are possibilities of penalties but high chances are also that for the period you have provided unregistered services you may have to refund all the money that period you have taken from the client so it is a very high risk game that if someone is providing unregistered services then it is mandatory and the Safest option to take SEBI license and then operate.

What we see in the market or on any social media platform is these entities, that is, the influencers which we call mostly registered or unregistered, what do you think?

I think that mostly the influencers are not registered and it is high time that SEBI means they had taken initiative in order to reduce the criteria also because there were multiple influencers back then who reached out to me and the common problem was that their criteria eligibility is not met Yes and yes they are not able to take the License and now since SEBI has reduced the criteria to near you know graduates in Commerce. So it is important that Influencers also work with a license because SEBI has already given relaxation they have also removed the experience criteria. It is a big relief for influencers.

So Now there are many people who are you know running the show Without the license and influencers or many All the people who are working in this area are unregistered and they have a query or misconception that after clearing the NISM certification we are doing our work like we are discussing live charges all these things can be done, then how much is it true. 

 Sheetal I had said this in a previous podcast that people have this confusion so I want to clarify once and for all I would like to mention here that whoever takes NISM certification, it is just a certificate They do not have a license to give recommendations only after getting the right license You can give a recommendation, okay, whatever You are taking the SEBI license, certification It is a criteria to get the license so it is a two step once you have cleared NISM and you have got the certificate which is NISM 15 for research analyst, once you have cleared it then the second step is to go to SEBI and take the license. You can't say that I have the certification, so now I am eligible, you have cleared that exam. Nobody has permitted you to go and give recommendations, so you need a proper registration you need from SEBI in order to give recommendations. Certification and qualification are the two criteria that we say eligibility criteria to get the license. 

If you want to do part time RA then which one should do it and After SEBI RA which jobs cannot do, means which jobs can be done along with part-time RA and which cannot be done.

So, one means is the full time research analyst  which means you have met your eligibility properly you are going to SEBI for license and after taking license time is fine now if a person is doing full time If you have taken a license then only you can do any kind of job & If that person is an individual then his separate other business which is there, he cannot be a director in another company and extra that cannot be all that  and now SEBI has introduced part time on the amendment which came in January, now let's say some teacher, somebody is a doctor and ex other means who is in services, who is in a job, okay the option apply for the RA  license provided criteria one is that they will The term is a part time research analyst So whatever their license is after that Whatever their communication will be with there Clients we will have to specifically Mention it as a SEBI registered part time Research analyst that term part time will Always be there one thing the client also Will know that those people are registered with part time RA and are working like this  so this is it. 

Second is that they can not own more than 75 Clients if they are a part time research Analyst that is the moment they reach 75 and they are crossing 75 they will have to convert it into the full time job okay and the third thing is that wherever he is employed he will have to get NOC from the current employer okay ok said he can't apply for license so there was a typical case where one of my clients who wanted to take a part time RA job had to eventually go for a full time job only because the employer was not ready to give the NOC so basically the employer also knows that he is doing a part time job  or the clients also know that he is doing a part time job.

What qualification is required To become SEBI registered, tell us about it And those who are not meeting on time, what qualification at this point of What are the Options available for them? 

So first is the  qualification you will have To have you know a graduate degree and a Post graduate in the field of finance So finance means commerce, you can say in that Your MBA finance has come, MCom has come Okay then if someone has done BBA BCom or your yes okay that Apart from that you know Bachelors in Economics If you have done actuarial science so the things are Covered under the you know eligibility Criteria that is eligible from LETS Those people who have done BTech have done MTech Will not be qualified for the license and NISM certification 15 which is that is a a must that is for part time also is a a must for full time also is a must that I have to do it so many people come to me that I have I have met the eligibility will it be possible without NISM like it or not that is part of it not and SEBI has mentioned it at the end so you have to meet the eligibility also and you have to clear NISM also right so this to are the things this is the bare minimum criteria now experience is done away with you really you know did not have and experience is fine and once you meet this criteria you are eligible for the License. 

Now comes the case where we will have the eligibility criteria they are not meeting the eligibility criteria, then they have two options one is as you mentioned that they wait for two years whether they can join NISM or do MBA or B.Com or whatever or It is a 15 months course in security market if you complete it then it is equivalent post graduation and SEBI will consider it. Second option is that you hire somebody who needs the criteria Their NISM is required  and then either you go For a partnership firm and you go for a Corporate license is LLP in corporate And private company both come so either Okay have you know form a company form Partnership firm with them and you know make them The principal officer okay they have to be  in the company and a partner in a Partnership firm or you know partner in an LLP you know they have person has to Be a KMP whoever person has become principal officer That person has to be a KMP That is for sure second is that means them You know you appoint them as a director and Then they have them as a principal officer in a company, so basically those who have also do not meet the criteria Non-individual is the only choice that they have Either he does his own MBA or he goes for a non-individual license Okay, so if he does an MBA then he has an additional window of two years in which he will take two more years Plus he will get his NIM certification After that, whenever he wants to do it, that means after two years or within that duration after that, the three to four months it takes for our registration to be done, okay, that means that time will take, so overall it will take two and a half years time, yes it takes that much time. 

If we go for corporate sector, then tentatively how much time can it take in today's day, if I decide that I want to go for corporate sector and I am hiring or tying up with someone who as a principal officer who Like if one is meeting the criteria of B.Com etc. How much time can it take to get a job in today's date?

If I think about corporate RA then mostly on corporate RA you can assume that if I talk about current situation then it is taking 4 to 5 months because whether it is an individual or you can say 3 to 4 months in corporate it is taking 4 to 5 months which earlier used to be 2 to 3 months but now it is taking a little means we are getting response from B.Sc also practically we are facing lot of this and getting responses from them so once Meaning Still there is an option where you can follow Up with the BSC officers is fine but once The application is being shifted from the officer to SEBI Isn't there any communication Right and  it is happening there Our situation is SEBI they are taking time To respond back So you understand earlier there was one level of approval Now there are two levels of approval one BS It takes time and then once BS is shifted to SEBI When it is shifted then SEBI also takes time To approve the application then that whole Process is taking four to five months Well we are facing this of four to five Months is being taken for a license means For an individual to get a license approved.

 But before that there will be another one Meaning there is another stage also coming Where they have to become corporate means Company has to be set up right so Company formation will also take some time Right how much time does it take approximately Sheetal you are thinking 15 to 20 days minimum Okay so company formation takes 15-20 days plus For corporate it is 1-2 months Roughly let us assume six months Complete the process.

if you don't go for MBA and if you go for corporate R&A then you are at least saving upon your 2 and two years, that means around two years We are saving here and work also You can start yes and there is a suggestion also that you can do this by doing this you know you take a corporate license you take the license and you can do MBA parallelly by yourself and Meaning while the term SEBI has given a liberty here I would say is that let's say you are not meeting a criteria And you can fire someone and you have Appointed that person as a principal officer But if you clear NISM And you have a you can still be associated with the company as you know the person associated with research service because that definition is there SEBI has written graduate in any discipline 

whatever I mean suppose if I have a company where we four directors or four people have done this together and the rest one will be the principal officer so all who will be the principal officer will have to meet the qualification yes and the others if they are from B.Tech background for example then they will have to give NISM certification of RA so that even they can be actively Involve 

If suppose If someone wants to become a corporate RA means a student or a person who is thinking that I should go ahead and become a corporate RA how much will it cost because the cost of MBA or this means is it viable to become a corporate RA plus many people also have compliance related many questions are there that after becoming a corporate RA the compliance will increase a lot. 

so means she will see the MBA if you calculate the overall cost from it then of course this shipper right because MBA has a cost and it is quite expensive what I Believe But if I do, I don't have much idea about it You know how much does the MBA exam cost It does come but then yes I know it is quiet Expensive but if I talk only about corporate RA right like earlier, SEBI had put a criteria of net worth of 25 lakhs for RA certain amount of stamp duty had to be paid CRC which is central registration centre right but that is done away with start your company capital of 1 lakh so I assume that you have formed a company with1 lakh its incorporation cost etc. including everything else including DSC etc. if you do it then you will have to in 10,000 mostly in actuals if say then cost of DSC etc. ₹100 Right, your company is formed for Rs. 10,000 The professional fee is done, you know set aside Whichever professional you are hiring but This I am talking about the government Charges or you know BSC charges extra So here you have to spend Rs. 101000 If you go for corporate license then SEBI the fee is total fee of SEBI and BSC 550000 plus GST 

But this Rs. 550000 is non refundable or refundable Or this is the time for your application now This entire payment has been will be paid on a different set of time so your application is first approved by PSC and then SEBI that is where you are paying application fee which is 20,000 plus GST so till you are going to SEBI means if your BSC approves if there is any application then you are applying paying fee which means you are safe from the front that yes your application will get approved till it comes to the state you are not paying any money to the government you are paying right 20,000 GST your application ke khela ke khela karne ke liye  application ke liye Correct And once after moving from BST to SEBI When SEBI approves the application That is where you are paying 3,000 plus GST to SEBI 50000 is the membership fee that you are payingTo BSC Ok ok so here I would like to also Clarify Sheetal there were lots of cases when SEBI had reduced the fee, that means it is now It has been reduced to 50 lakhs 500 and all And that is where you know I had a you know thenTill now there was no clarity from BS on this thing But lots of people like the fee  has been reduced,  I said that SEBI's fees have been reduced But membership fees to BSC will still have to be paid The membership fee is refundable, which means If we surrender our license then 2This 5 lakh will come to us or the applicationThe fee is not refundable but the registration fee It is refundable, which means it is written in the regulation It is refundable registration fee is If your 5 lakh is refundable plus GST and You can assume the maximum amount for forming a company Let's say 15000 then this is the total you know The cost for you know doing the incorporation andThe license professional Fees which depends Upon different professionals, how much they charge that depends upon this. 

Many people ask about online MBA Is online MBA allowed or not And after doing PG DFM, there is a course There is another certificationThis is a diploma program which is of one year So is it allowed or not It will take Is online MBA allowed, online MBA or then SEBI has not specified whether Online or offline that is not clarified By SEBI but then it has to be a two year Full time MBA correspondence if If someone is doing it It will not work It is not a good correspondence course It will work online or whatever if

 it is full time According to MBA, if it is categorized then it is allowed and one year diploma program is not allowed correct It has to mean clarity about it Actually it is very important because very All you Sheetal Sir, actually if you see, there is no clear mention on the regulation but on the regulation of IA it is very clearly mentioned two years full time so And our entire BSc body or SEBI body they relate to IA and RA Quite a lot Okay so that is why it means that your MBA is also two years full time will have to be done and practically you will have to take two years full time because practically we have seen this thing that SEBI has raised objections even for RA where it was not two years full time you know MBA ok yes so actually qualification is the biggest issue here it seems that this will be the qualification because it is a very big one isn't it the confusing part is that we are graduates and if the graduate has given any discipline saying then it will be particularly for those who are working with corporate Associate Wants to be an associate, that is associate person right There should be clarity that for associate person graduation in any discipline will be fine but for principal officer compulsorily graduation in the field of finance and economics and commerce should be right, whose papers are bound It is already mentioned in the regulation It is about people interpreting it wrong then there is another one that as we know that the criteria of experience It has been removed, that experience is not yet SEBI is not looking at it if you want to become your RA but Still people ask whether we are B. Tech or we are from some other field we are not from commerce but have five years or 10 years experience so this is also today's It is not allowed during the day If you have experience, it doesn't matter to SEBI It will simply check whether your graduation is in commerce or not, post is graduation in commerce stream or not it is ok  means it is clear that the qualification should be strictly graduation if you are going for individual RA in the field of finance and commerce and if you are going for corporate RA then whoever your principal officer is, his graduation in the field of finance and associate person's graduation in any field with NISM Certification is necessary  

What is the reason behind taking this much time in the licensing or registration process of an individual RA? 

There are some internal factors I will also say restructuring, since you know There is a little free shuffling with the teamWhat is extra internal, we don't know but We also believe that we will get some responsibly I mean you know delays are coming one second Is with the amount of paper work done by SEBI very significantly, I mean earlier we used to apply in SI the amount that we used to put in the portal the number of declarations, the number of papers work used to be much less yes because I have gun to do this I know this mine came in 15 days no registration means why are you no more than 15 to 20 the declaration that you are giving is okay then you have to make a business plan on top of that then you know the complete details of infrastructure you have to disclose and then there is and after that also you have to do it then you know and then then BSc  will also take Around 15-20 days I can't blame them also Because the number of papers that are there too It is taking time to review it right  re you know Application review then declaration If review is done then after 15-20 days Mostly after one month they will rip Back with the set of questions.