SEBI-registered investment advisers must meet continuing responsibilities relating to client protection, suitability of advice, fees, disclosures and regulatory reporting. Registration is the starting point of a regulated advisory practice. Maintaining compliance requires organised records, reliable procedures and regular monitoring throughout the year.

An annual compliance checklist helps advisers review these responsibilities systematically. However, it should also capture monthly disclosures, half-yearly filings and obligations triggered by changes in personnel, ownership or business activities. Leaving these matters until the annual audit can result in missed deadlines and incomplete evidence. The following article explains the principal compliance areas that RIAs should review, based on the regulatory position as of 15 October 2026. Individual applicability should be assessed according to the adviser’s registration category, business structure, services and clients.

In this article, CA Manish Mishra talks about Annual Compliance Checklist for SEBI-Registered RIAs.

Understand the Applicable Compliance Requirements

An RIA should begin its annual review by identifying the requirements that apply to its business. The SEBI (Investment Advisers) Regulations, 2013 must be read together with the applicable Master Circular, subsequent circulars and directions issued by the Investment Adviser Administration and Supervisory Body, or IAASB. A checklist should reflect these requirements and the adviser’s actual operations.

Review the Registration Category

Confirm whether the adviser is registered as an individual, non-individual or part-time investment adviser. Review whether the registration category remains appropriate for the activities being conducted. Changes in client numbers, revenue, ownership or services may require additional action, so the review should consider developments during the entire year.

Prepare an Applicability Register

Maintain a register identifying each relevant obligation, its legal basis, frequency, deadline and responsible person. Record why a requirement applies or does not apply. This makes the checklist easier to review and helps prevent requirements applicable to one type of adviser from being incorrectly applied to another.

Allocate Responsibilities Clearly

Assign responsibility for preparation, review, submission and evidence retention. In a small practice, one person may perform several functions, but each task should still have a clear owner. The checklist should show pending items and corrective actions so that management can identify gaps before deadlines approach.

Conduct the Annual Compliance Audit

The annual compliance audit under Regulation 19(3) examines whether the adviser has complied with the IA Regulations and applicable directions. It should review actual client files, fee calculations, disclosures and operating practices. Written policies alone do not establish that the business followed those policies during the year.

Complete the Audit Within Six Months

The annual compliance audit must ordinarily be completed within six months of the financial year-end. For a financial year ending on 31 March, the normal completion deadline is 30 September, unless an applicable extension provides otherwise. Begin preparation early enough to locate records, answer queries and address inconsistencies before the deadline.

Appoint an Eligible Professional

Eligible auditors include members of the Institute of Chartered Accountants of India and the Institute of Company Secretaries of India. SEBI clarified on 25 March 2026 that members of the Institute of Cost Accountants of India are also eligible. Verify professional eligibility and relevant experience before appointment, and do not assume that a financial audit automatically satisfies the regulatory compliance-audit requirement.

Organise Supporting Documents

Prepare client agreements, risk assessments, advice records, fee worksheets, complaint records, staff certifications and regulatory submissions. Give the auditor a complete client list and explain material business changes. A well-organised audit file allows the review to focus on compliance rather than repeated requests for basic information.

Submit the Audit Report and Resolve Observations

Audit completion should be followed by timely submission, appropriate disclosures and corrective action. An observation should remain open until the business has evidence that the underlying issue has been addressed. Repeated observations may indicate that earlier corrections were incomplete or ineffective.

Calculate the Submission Deadline Correctly

The report and adverse findings, together with the required approved action taken, must be submitted within one month of the audit-report date and no later than 31 October for the previous financial year. These are separate limits. An earlier report date can create an earlier submission deadline, so advisers should not automatically wait until October.

Prepare an Action-Taken Record

For each finding, explain the issue, affected process, corrective measure, responsible person and completion date. Obtain the required approval from the individual adviser or management of the non-individual adviser. Where action remains pending, accurately state its status and follow the applicable reporting instructions.

Complete Required Disclosures

Publish the prescribed audit status and adverse findings with action taken on the website, and provide the compliance audit report to clients as required. Preserve evidence of publication and communication. These steps should be included in the audit-closure process rather than treated as optional administrative work.

Review the Mandatory Deposit

The deposit requirement should be reviewed annually using the prescribed client-count measure. The calculation depends on the maximum number of clients on any day during the previous financial year, which may differ from the number of clients remaining at year-end.

• Determine the Correct Deposit Slab: The prescribed amounts are ₹1 lakh for up to 150 clients, ₹2 lakh for 151–300 clients, ₹5 lakh for 301–1,000 clients, and ₹10 lakh for 1,001 or more clients. Retain a working paper showing the highest client count and how the applicable slab was determined.

• Address Changes by 30 April: Where the applicable deposit amount changes, complete the required revision by 30 April of the subsequent financial year. Maintain it through a permitted arrangement and ensure that the required lien is recorded in favour of the IAASB. Preserve confirmation and supporting deposit records.

• Reconcile Client Information: Compare the client register with agreements, onboarding records and periodic reports. Investigate duplicate records, closures and inconsistent classifications before finalising the calculation. A consistent counting method helps prevent contradictory information across deposit calculations and regulatory submissions.

Review Client-Level Segregation

Where applicable, advisory and distribution activities must comply with client-level segregation requirements. This review should consider the relevant group or family relationships and how clients receive services. Separate branding, teams or accounts do not by themselves demonstrate that segregation has been maintained.

• Examine Advisory and Distribution Relationships: Compare the relevant advisory and distribution client records using consistent identifiers. Identify potential overlap and investigate how each case arose. The review should examine actual service arrangements rather than relying only on declarations or the labels assigned to client accounts.

• Obtain the Annual Certificate: Where applicable, obtain the annual certificate confirming compliance with client-level segregation requirements within six months of year-end. It should form part of the compliance audit. Prepare the supporting information early so that certification does not delay the audit.

• Document Applicable Exceptions: If an exemption or waiver is relied upon, verify the conditions and retain supporting evidence. Do not assume that a client’s financial sophistication automatically establishes eligibility. Record the basis on which the exception was assessed and any required client documentation.

Complete Half-Yearly Periodic Reporting

Half-yearly reports provide regulatory information about the advisory business. They should be prepared from reconciled records rather than reconstructed at the filing deadline. Including these submissions in the annual calendar helps ensure that both reporting periods receive adequate attention.

• Monitor the Reporting Dates: Reports for the half-years ending 31 March and 30 September are ordinarily due within 30 days of the respective period-end. This generally means 30 April and 30 October, subject to applicable directions or extensions. Use the current format and submission process prescribed for that period.

• Verify the Reported Information: Check client numbers, fees, complaints, personnel and other required information against underlying records. Explain differences before submission. An internal reviewer should confirm that the report is complete and consistent with other information already submitted to the regulator or IAASB.

• Preserve Submission Evidence: Retain the final report, calculation sheets and acknowledgement. If the report is corrected, preserve the original submission, the reason for correction and the revised version. This creates a clear history of the information filed and the basis for subsequent changes.

Review Client Agreements and MITC

The advisory agreement establishes the scope and terms of the relationship. An annual documentation review should confirm that required agreements exist, prescribed terms are included and the actual service remains consistent with the contract. It should also identify missing consent or outdated documentation.

• Verify Agreements Before Advice and Fees: Ensure that the required signed agreement is in place before advice is provided or fees are charged. Incorporate the prescribed terms and Most Important Terms and Conditions, or MITC. Check that the client received the signed document and that acceptance evidence is retained.

• Review Validity and Amendments: Annual review does not automatically mean every client must sign a fresh agreement each year. Examine validity, renewal terms, amendments and regulatory changes. Obtain any necessary consent through an acceptable process and preserve evidence of communication.

• Maintain Version Control: Identify which agreement version applies to each client and when revised terms became effective. Avoid replacing documents without preserving their history. Version control is particularly useful when reviewing a complaint concerning fees or services delivered under earlier terms.

Update Risk Profiling and Suitability Assessments

Risk profiling and suitability are continuing responsibilities under Regulations 16 and 17. The adviser should understand the client’s objectives, financial circumstances and ability to bear losses. An assessment completed at onboarding may need updating as the client’s situation changes.

• Refresh Client Information Periodically: Review investment objectives, horizon, income, liabilities, liquidity needs and risk tolerance. An annual review may be a useful internal control, but events such as retirement or income loss can justify an earlier reassessment. Record the information received and communicate the resulting risk assessment appropriately.

• Explain the Suitability of Advice: Maintain a documented explanation connecting the recommendation to the client’s circumstances. Consider both willingness to accept risk and financial capacity to absorb losses. A questionnaire score alone may not explain why a particular investment or strategy was appropriate.

• Review Non-Individual Clients Appropriately: For non-individual clients, consider the relevant investment policy and authorised decision-making arrangements. Establish who can provide information and approve instructions. Document limitations where necessary, and assess whether adequate information is available to provide suitable advice.

Check Fees, Collections and Refunds

Fee compliance requires accurate calculations and evidence supporting the amount charged. Review agreements, invoices, receipts and refunds together. This helps identify issues such as incorrect family aggregation, unsupported AUA calculations or charges inconsistent with contractual terms.

Apply the Relevant Fee Limits

For covered individual and HUF clients who are not accredited investors, current limits include ₹1,51,000 annually per client family under fixed-fee mode and 2.5% annually under AUA mode, subject to prescribed conditions. Confirm the applicable client category and fee arrangement before testing compliance.

Review Advance Collections and Fee Changes

Compare advance collections and changes in fee mode with the applicable rules and agreement. Maintain a worksheet showing the billing period, basis of calculation, amount received and adjustments. Review changes carefully to prevent overlapping or excessive charges.

Verify Refunds on Termination

Where an engagement ends prematurely, calculate the refund and any permitted deduction under the applicable provisions. Preserve the calculation, approval and payment evidence. Clear records help the client understand the settlement and allow an auditor to verify it.

Obtain Annual Consent for Applicable Second-Opinion Services

A specific annual requirement applies when AUA-based fees are charged for a second opinion on assets held under a pre-existing distribution arrangement with another entity. These engagements should be identifiable separately so that the required disclosures are not overlooked.

Identify Covered Clients and Assets

Maintain a list of relevant clients and the assets covered by the second-opinion service. Record the fee basis and distinguish the arrangement from other advisory services. Review the list regularly as clients join, leave or change their holdings.

Disclose the Additional Distribution Cost

Annually disclose and seek consent that the client will incur distributor consideration in addition to advisory fees. The fee on the relevant assets is subject to the prescribed 2.5% annual limit. Retain dated disclosure and consent evidence for each applicable year.

Monitor Staff Qualifications and Certifications

Personnel compliance should be monitored throughout the year. The business must understand who performs advice-related functions and which requirements apply to them. An annual review should check both current eligibility and upcoming certification expiries.

• Maintain a Role-Based Register: Record responsibilities, qualifications, certifications and expiry dates for relevant personnel. Update the register when employees join or change roles. Actual duties should guide the assessment because a job title may not accurately describe involvement in investment advice.

• Apply the June 2026 Certification Update: The NISM Series XXV-B route applies to PAIA performing only sales and other non-core services. Other PAIA continue under the applicable X-A and X-B requirements. Apply the transition provisions for eligible non-core staff already holding those certifications, and do not extend the relaxation to advice-related functions.

• Plan Renewals in Advance: Set reminders sufficiently before expiry to complete the applicable renewal process. Review responsibilities if a certification lapses or a person becomes ineligible. Preserve updated certificates and evidence supporting any change in role or duties.

Review Complaints and Investor Disclosures

Complaint handling should be supported by a clear register, assigned responsibility and regular monitoring. The annual review should examine both unresolved matters and patterns in complaints received during the year. Recurring concerns may reveal weaknesses in billing, communication or service delivery.

• Maintain a Complaint Register: Record the receipt date, issue, response, escalation and resolution evidence. Monitor matters against applicable timelines and follow relevant SCORES and ODR procedures. Ensure that staff can identify a complaint even when the client does not use formal grievance terminology.

• Update Monthly Complaint Information: Display the prescribed complaint information monthly, within seven days of the previous month-end. Address nil complaints in the required format. Keep records supporting the figures displayed and check that published information matches the complaint register.

• Review the Investor Charter: Keep the applicable Investor Charter and grievance information available through prescribed channels. Verify contact details and escalation information. Check whether the business’s actual service procedures support the commitments communicated to investors.

Preserve Records and Communications

The adviser should be able to reconstruct what information was obtained, what advice was given and why it was considered suitable. Records should remain complete, accessible and protected. Retention procedures should cover documents and communications across all approved systems.

• Maintain the Complete Advice Trail: Preserve KYC records, assessments, agreements, advice, supporting rationale and relevant communications. The general minimum retention period is five years, while disputes or specific regulatory directions may require longer preservation. Apply relevant signing and electronic-record requirements.

• Test Retrieval and Backups: Select sample clients and retrieve their full records, including messages or recordings held separately. Test whether backups can be restored. This practical check can reveal unavailable recordings, incomplete files or advice sent through unmonitored channels.

Review Marketing and Social Media

Marketing compliance should address both newly published and older content. The adviser should review how its services, registration and performance are presented to prospective clients. Internal controls should ensure that required checks occur before publication.

• Examine Content and Approvals: Review advertisements, presentations, website pages and sales scripts against applicable requirements. Check required disclosures, approval procedures and the basis for claims. Preserve approval and publication records so that the business can demonstrate which content was authorised.

• Verify Registered-Identity Disclosures: Review compliance with the February 2026 social-media directions concerning registered-name and registration-number disclosures. Consider relevant handles, videos, short-form content and closed-group communications. Apply prescribed arrangements where the entity holds multiple registrations.

Assess Technology, Vendors and Data Protection

Technology supports onboarding, advice, communication and recordkeeping, making it an important compliance dependency. Review the systems used, the information they hold and the responsibilities of external providers. Applicable cybersecurity and accessibility obligations should be assessed separately.

• Review Access and Recovery Procedures: Maintain an inventory of systems and access rights. Remove unnecessary access, review confidentiality arrangements and test recovery procedures. Check whether the business can retrieve client information if a vendor relationship ends or a system becomes unavailable.

• Monitor SaaS and AI Use: Include the prescribed half-yearly SaaS compliance undertaking in the reporting process. Where AI tools are used, review required disclosures and maintain oversight of outputs. The adviser remains responsible for client data and AI-assisted advice.

Monitor Business Changes and Regulatory Payments

Certain obligations arise when business circumstances change and should not wait for the annual audit. A regular monitoring process helps identify approval, notification and transition requirements before implementation.

• Review Growth and Structural Changes: Monitor applicable individual-to-non-individual transition thresholds, changes in control, key personnel and material business developments. Include compliance review in significant decisions. Preserve the assessment and any approval or notification made.

• Track Fees and Administrative Dues: Maintain a diary of applicable SEBI periodic fees and IAASB dues. Review upcoming payments without assuming that every charge is annual. Preserve receipts and reconcile outstanding amounts promptly.

Conclusion

Annual compliance for SEBI-registered RIAs requires consistent attention to documentation, client protection, reporting and operational controls. The annual audit depends on the quality of records and practices maintained throughout the year.

A useful checklist should distinguish annual requirements from monthly, half-yearly and event-based obligations. Clear responsibility, timely reviews and reliable evidence help advisers identify weaknesses early and maintain a professional practice capable of meeting its continuing responsibilities.

Frequently Asked Question (FAQ’s)

Q1. Is an annual compliance audit mandatory for SEBI-registered RIAs?

Ans. Yes. Regulation 19(3) requires investment advisers to conduct an annual audit of compliance with the IA Regulations and applicable circulars. A financial-statement audit does not automatically replace this regulatory compliance audit.

Q2. What is the deadline for completing the annual compliance audit?

Ans. The audit must ordinarily be completed within six months of the financial year-end. For a year ending on 31 March, the normal deadline is 30 September, unless an applicable regulatory extension provides otherwise.

Q3. When must an RIA submit the compliance audit report?

Ans. The report and adverse findings, together with the required approved action taken, must be submitted within one month of the audit-report date and no later than 31 October. An earlier report date can create an earlier submission deadline.

Q4. Who can conduct an RIA’s annual compliance audit?

Ans. Eligible professionals include members of the Institute of Chartered Accountants of India, the Institute of Company Secretaries of India and the Institute of Cost Accountants of India. The adviser should verify the auditor’s eligibility and relevant experience before appointment.

Q5. What deposit must an RIA maintain?

Ans. The prescribed deposit is ₹1 lakh for up to 150 clients, ₹2 lakh for 151–300 clients, ₹5 lakh for 301–1,000 clients, and ₹10 lakh for 1,001 or more clients. The applicable slab depends on the maximum number of clients on any day during the previous financial year.

Q6. When should an RIA revise its deposit amount?

Ans. Any required revision based on the previous financial year’s maximum client count should be completed by 30 April of the subsequent financial year. Retain the calculation, deposit evidence and confirmation of the required lien arrangement.

Q7. What are the half-yearly reporting deadlines for RIAs?

Ans. Reports for the periods ending 31 March and 30 September are ordinarily due within 30 days of the respective period-end. This generally means 30 April and 30 October, subject to applicable directions or extensions.

Q8. Must client risk profiles be updated every year?

Ans. The regulations require client information and risk assessments to be updated periodically. An annual review can be an internal control, but significant changes in income, objectives, liabilities or liquidity needs may require an earlier reassessment.

Q9. How long must an RIA preserve client records?

Ans. The general minimum retention period is five years. Records connected with unresolved disputes or specific regulatory preservation directions may need to be retained longer. Relevant documents, advice rationale and communications should remain accessible.

Q10. How frequently must an RIA update complaint disclosures?

Ans. The prescribed complaint information must be updated monthly, within seven days of the previous month-end. Nil complaints should also be addressed in the required format, and the published figures should match the adviser’s complaint register.