Information Technology

SEBI issues guidance on electronic signatures & portfolio management agreement

SEBI has issued a clarification with regard to affixation of electronic signatures on a portfolio management agreement. Portfolio Managers are registered and regulated under the SEBI (Portfolio Managers) Regulations 1993. They manage funds or portfolios for clients and their relationship is specified in the agreement signed between the portfolio manager and the client. Since the entire client onboarding process in totally electronic, clients put electronic signatures on such a portfolio management agreement.

The contents of such as an agreement are laid out in Regulation 14 to be read with Schedule IV of the regulations.

The clarification comes after an entity registered with SEBI as a Portfolio Manager had sought an interpretive letter under the SEBI (Informal Guidance) Scheme, 20003. The entity had asked that if clients write electronically that they have understood the fees/ charges structure, using their fingers or a stylus pen on the relevant portion of ‘Annexure on fees and charges of portfolio management account opening form’ using touch sensitive screen of their device, whether this shall satisfy the requirement mandated under Clause 4 (j) of the SEBI circular in this regard?

Clause 4 (j)

This clause states that:

New clients shall be required to separately sign the annexure on fees and charges and add in their own handwriting that they have understood the fees/ charge structure.”

SEBI’s Response

SEBI responded to the query by saying that by virtue of Section 5 of the Information Technology Act, 2000, any requirement of signature shall be deemed to have been satisfied if such information is authenticated using electronic signatures. The electronic signature, however, must be affixed in such a manner as may be prescribed by the Central Government.

It further added that the intent of Clause 4(j) is to disclose the fees and charges to the client, and ensure that she has understood and acknowledged the fees and charges structure. Hence, the client should sign the Annexure using electronic signature (as per IT Act) and write electronically that they have understood it.


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Rohit Ranjan Praveer

Rohit is a practicing advocate at Delhi. Beginning as a tech enthusiast, Rohit always had a keen interest in computer forensics and information security. Building upon these fundamentals, he has undertaken extensive research on various techno-legal topics and continues his pursuit pass on valuable information to the masses, with a zeal to build something that outlasts him.​

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