SEBI’s New MITC Requirement for Investment Advisors & Research Analysts

The Securities and Exchange Board of India (“SEBI”) vide circulars ‘SEBI/HO/MIRSD/MIRSD-PoD/P/CIR/2025/19’ and ‘SEBI/HO/MIRSD/MIRSD-PoD/P/CIR/2025/20’ dated February 17, 2025, has provided standardized ‘Most Important Terms and Conditions’ (“MITC”) that Investment Advisers (“IA”) and Research Analysts (“RA”) must include in their ‘Investment Advisory Agreements’ and in the ‘Terms and Conditions for providing research services’ (collectively “Client Documentation”) respectively.

On January 8, 2025, SEBI had issued circular SEBI/HO/MIRSD/ MIRSD-PoD-1/P/CIR/2025/003 addressed to IAs and circular SEBI/HO/MIRSD/MIRSD-PoD1/P/CIR/2025/004 addressed to RAs, which, inter alia mandated IAs and RAs to include MITC (may be  specified by  SEBI) to be disclosed in their Client Documentation. As promised, the aforementioned circulars dated February 17, 2025 contain the MITC.

• Mandatory Disclosure: IAs and RAs must disclose MITCs in their agreements and terms and conditions respectively.
• Intimation of MITC to the existing clients: Existing clients must be informed about the respective MITCs via email or another suitable mode by June 30, 2025. For new Client Documents, i.e. entered after the date of the Circulars, MITCs must be incorporated, and consent of the clients must be obtained by the IAs and RAs.

The SEBI circular introducing MITC for IAs and RAs is a significant regulatory step aimed at enhancing transparency and investor protection. By mandating the inclusion of standardized MITC in Client Documents, SEBI is trying to ensure that the clients opting for RA/IA services understand the limitations and risks associated with investment recommendations.

The SEBI circulars mentioned in this note can be found below:

SEBI’s February 17, 2025 for Investment Advisors: SEBI | Most Important Terms and Conditions (MITC) for Investment Advisers

SEBI’s February 17, 2025 for Research Analysts: SEBI | Most Important Terms and Conditions (MITC) for Research Analysts

SEBI’s January 8, 2025 for Investment Advisors: SEBI | Guidelines for Investment Advisers

SEBI’s January 8, 2025 for Research Analysts: SEBI | Guidelines for Research Analysts

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Vinod Joseph, Partner – Email – vinodjoseph@elp-in.com

Zaynali Badami, Advocate – Email – zaynalibadami@elp-in.com