From Schedule V to Two-Part Format: SEBI Makes Portfolio Manager Compliance Smarter 

Posted On - 8 December, 2025 • By - Suraj Jagtap

On September 9, 2025, SEBI rolled out a new circular aimed at making life easier for portfolio managers and their clients. The regulator has overhauled the Disclosure Document format, what portfolio managers must hand over to clients before signing any agreement. This requirement is outlined in Regulation 22(3) of the SEBI (Portfolio Managers) Regulations, 2020, which mandates the provision of a Disclosure Document to clients, accompanied by a Form C certification. Until now, managers followed a rigid template laid out in Schedule V of the same regulations. 

But things have changed. As part of a broader effort to streamline regulations, and following discussions with the Association of Portfolio Managers of India (APMI), SEBI scrapped Schedule V altogether. In its place, they’ve brought in a much simpler two-part format through this new circular. The new rules take effect immediately, aiming to enhance transparency and reduce paperwork for portfolio managers. 

Let’s break down what’s changed, the legal background, and what portfolio managers still need to keep in mind. 

The SEBI (Portfolio Managers) Regulations 2020 lays out how anyone managing or advising on portfolios for clients should operate. Regulation 22 says portfolio managers have to give clients a Disclosure Document before any agreement is signed. Regulation 22(4) spells out exactly what needs to go in there, everything from the manager’s background, business structure, and client representation to risks, fees, and the services on offer. Under Regulation 22(5), an independent chartered accountant must certify the accuracy of the document. SEBI also has the power, under Regulation 22(7), to decide the Disclosure Document’s format and content. 

Schedule V

Before this new circular, the format for the Disclosure Document was locked into Schedule V. This meant a long, detailed template that covered everything: disclaimers, definitions, a rundown of the services, penalties, pending cases, risk factors, client types, expenses, tax details, accounting policies, how to handle complaints, past performance, audit findings, and investments with related parties. Every time something changed, managers had to update the whole document, get it recertified, and send the whole revised document to SEBI, even if only one section actually needed tweaking. Unsurprisingly, this turned into a paperwork nightmare. 

What’s new: the 2025 circular

The new circular simplifies things in three main ways: 

1. Schedule V and two-part document

SEBI abandoned Schedule V and introduced a Disclosure Document comprising two sections: static and dynamic. The static section covers stuff that rarely changes, like the disclaimer, definitions, details about the portfolio manager and services, penalties, risk factors, expenses, tax info, accounting policies, investor services, and diversification policy. The dynamic section handles everything that can change more often: client representation, financials, performance track record, audit findings from the last three years, and investments in related-party securities. This split means managers don’t have to re-certify the whole document for every small update. 

2. Only certify the pages that change

From now on, each parameter in the Disclosure Document starts on a new page. If something changes, managers only need to get the updated page certified by both an independent chartered accountant and the principal officer. They have to highlight these updated pages when communicating with clients. This move saves both time and money, focusing effort only where it’s needed. 

3. Fast-track updates to clients and SEBI

Any time there’s a change, managers must send the updated pages to clients, put them up on their website, and file them with SEBI, all within seven working days. This keeps clients in the loop and SEBI’s records current. The circular makes it clear: all other obligations under the regulations stay the same, including the need for certification and the detailed content laid out in Regulation 22(4). 

In short, SEBI’s new approach makes disclosure easier, faster, and more transparent, without cutting corners on key information or client protection. Portfolio managers can spend less time on paperwork and more on what matters: managing portfolios. 

SEBI’s annexure spells out exactly what goes into the static and dynamic sections of the new Disclosure Document. Getting familiar with these details isn’t just helpful; it’s crucial for staying compliant. 

The static section covers eleven points, and these don’t change often: 

1. Disclaimer clause: This makes it clear that SEBI hasn’t approved or disapproved the document and warns that distribution might run into legal restrictions depending on where you are. 

2. Definitions: Here, you’ll find explanations of key terms, like “Act,” “accredited investor,” and “portfolio manager.” The annexure even gives examples, such as what qualifies someone as an accredited investor by financial threshold. 

3. Description: This section gives background on the portfolio manager, their history, how they’re structured, and who the key people are. 

4. Penalties and pending litigation: You need to disclose any regulatory actions, penalties, or ongoing legal proceedings involving the portfolio manager or its directors. 

5. Services offered: Lists the types of portfolio management services (discretionary, non-discretionary, advisory), and spells out investment objectives and typical asset classes. 

6. Risk factors: Lays out the specific risks tied to the services, market, credit, operational, concentration risks, and so on. 

7. Nature of expenses: Details all fees and charges like management and performance fees, custodian charges, brokerage, audit fees, and more. 

8. Taxation: Provides a broad overview of the tax implications for portfolio transactions and the relevant laws. 

9. Accounting policies: Explains how client accounts are maintained, how securities are valued, and how returns are calculated. 

10. Investor services: Covers how grievances get addressed, who to contact, and the timelines for resolving complaints. 

11. Diversification policy: Describes how the portfolio manager makes sure investments are spread across different asset classes and clients. 

The dynamic section has five items. These are the ones that shift more frequently and need close attention: 

1. Client representation: Number of clients, assets under management. 

2. Financial performance: Audited financial statements and key ratios. 

3. Portfolio manager performance: Returns generated for different strategies and benchmarks. 

4. Audit observations: Material findings from audits over the past three years. 

5. Investments in related-party securities: Details on investments involving related parties. 

Since these can change over time, portfolio managers need to track them carefully and update as needed. 

What does this mean in practice?

First, it boosts transparency and protects investors. SEBI now requires timely updates and website disclosures, so clients always have current information about portfolio managers, their operations, risks, and performance. This helps clients judge whether a manager is the right fit for their goals and risk tolerance. 

Second, it eases the compliance load. The split between static and dynamic sections, plus page-by-page certification, means managers don’t have to rewrite and certify the entire Disclosure Document for minor tweaks. They just update the relevant pages. This fits SEBI’s bigger push to streamline compliance without letting investor protection slip. 

But none of this works without strong internal compliance systems. Portfolio managers require processes to identify changes that necessitate disclosure and ensure that updates are certified, shared with clients, and filed with SEBI on time. Ignoring these rules, or missing updates in the dynamic section, can mislead clients and bring penalties. Independent chartered accountants play a key role here; managers should bring in qualified professionals to review and certify changes. 

Don’t forget Form C. Even with this new format, portfolio managers still have to provide Form C, a certificate confirming that their services follow SEBI regulations, alongside the Disclosure Document before any agreement is signed. 

In short, SEBI’s September 2025 circular marks a real shift for portfolio managers. By scrapping Schedule V and rolling out a two-part Disclosure Document, SEBI has simplified and streamlined compliance. The new structure, static and dynamic sections, page-wise certification, and required updates within seven days, lightens the administrative load while giving clients more transparency. Portfolio managers need to update their processes quickly, work with independent chartered accountants, and keep clients informed. This move demonstrates SEBI’s ongoing commitment to making business easier while protecting investors, and it may set the standard for other regulated industries in the future.