Most Important Terms and Conditions (MITC) now mandatory for every IA client agreement

Every Investment Advisory Agreement must now incorporate a standardized MITC block: the IA can only accept fee payments (never client funds/securities on their behalf), cannot execute trades without explicit per-trade consent, and fee is capped at ₹1,51,000/year (Fixed Fee mode) or 2.5% of Assets under Advice per year, for individual/HUF clients.

From the circular

“The Investment Adviser (IA) shall only accept payments towards its fees for Investment Advisory Services and is not permitted to accept funds or securities in its account on the client's behalf. ... The current fee limit under Fixed Fee mode is Rs 1,51,000/- per annum per family of client. Under Assets under Advice (AUA) mode, maximum fee limit is 2.5 per cent of AUA per annum per family of client.”

View source document →

In practice

Before signing an advisory agreement with a new HUF client opting for Assets under Advice pricing, the IA's agreement must carry the MITC clause stating the fee cannot exceed 2.5% of AUA per year, and that the IA is not permitted to hold the client's funds or securities directly — only to charge a fee for advice.

Illustrative scenario written by Northspread — not text from the circular itself.