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Archive / Investment Adviser (Level 1) / Key Regulations
nism-series-xa-individual-ria-prohibited-distribution-regular-mf[ INVESTMENT ADVISER (LEVEL 1) ]

Under SEBI IA Regulations, can an Individual Registered Investment Adviser distribute Regular Mutual Fund plans to non-advisory clients?

[ A ]Yes, up to ₹50 Crore of distribution per year.
[ B ]Yes, an individual RIA can distribute regular mutual funds to friends and relatives.
[ C ]Yes, an individual RIA can distribute regular mutual funds if they use a different business email address.
[ D ]No, an individual RIA is prohibited from distributing any financial products (including regular mutual funds) or earning distribution commissions, maintaining 100% advisory purity.[ CORRECT ]
Takeaway

No — an Individual RIA is barred from distributing any financial products, including regular mutual funds, or earning any distribution commission, in order to maintain complete advisory purity as a fee-only fiduciary.

Derivation
SEBI's segregation rules are strictest for individual RIAs specifically because a single person cannot practically maintain an internal firewall between an advisory arm and a distribution arm the way a larger corporate entity might attempt to (even though corporate RIAs face their own strict client-family segregation rules). To eliminate the conflict of interest entirely, an individual RIA is simply prohibited from earning any distribution income at all — regardless of whether the recipient is an existing advisory client, a friend, a relative, or an unrelated non-advisory investor. This absolute, no-exceptions prohibition for individuals (as opposed to the more nuanced client-family segregation for corporate RIAs) is the specific regulatory nuance being tested.
Why the others fail
A — Yes, up to ₹50 Crore of distribution per year.
There is no rupee-based distribution allowance carved out for individual RIAs — the prohibition on individual RIAs distributing regular mutual funds is absolute.
B — Yes, an individual RIA can distribute regular mutual funds to friends and relatives.
The prohibition applies regardless of the recipient's relationship to the adviser; distributing regular mutual funds to friends or relatives is still barred just as it would be for any other investor.
C — Yes, an individual RIA can distribute regular mutual funds if they use a different business email address.
Using a different business email address is an administrative detail with no bearing on the underlying statutory prohibition — it cannot be used to bypass the individual RIA distribution ban.