Securities Advisory Licence

What is a securities advisory licence?

Securities advice is a regulated activity under the Securities Act, 2015. The Securities and Futures Advisers (Licensing and Operations) Regulations, 2017 govern licensing, competence, financial resources, client conduct and renewal. The licensing question turns on what the applicant actually does, not whether its business card describes it as a consultant, research house, financial educator or fintech platform.

A securities adviser may recommend whether, when and on what terms particular securities should be bought, sold, exchanged or subscribed for; issue analyses intended to facilitate such decisions; or advise on a non-custodial securities portfolio. An adviser licence is not a securities-broker licence, a discretionary securities-manager licence or a general authority to collect investor money. An applicant proposing multiple regulated functions must map each to the correct statutory permission.

The consolidated regulations incorporating S.R.O. 742(I)/2023 are the operative starting point. They changed the earlier distribution-only regime, financial thresholds, forms and fee schedule. Earlier checklists and archived SECP guidance must be read subject to those amendments, not reproduced without comparison.

Eligibility: companies, individuals and limited exemptions

Companies. Regulation 4 permits an eligible company registered under the Companies Act to seek a securities-adviser licence. Its constitutional documents must support the activity; it must meet the fit-and-proper criteria, maintain an appropriate business and records arrangement, meet financial-resource requirements and have suitably qualified management. The 2023 amendments removed the former fixed 51% sponsor-shareholding threshold; changes in sponsors remain subject to the Commission's prior written approval.

Individuals. The 2021 amendment established a licensing route for qualifying individuals, and the 2023 consolidated regulation 4(d) further identifies individuals not employed in a financial institution. The individual must meet applicable fit-and-proper and certification requirements, have the prescribed financial resources, and appear on the FBR Active Taxpayer List under Annexure A. The corporate governance clauses are not simply copied onto an individual; regulation 4 expressly limits which sub-regulation 4(2) conditions apply.

Qualifications. Annexure A recognises a CFA charter, membership of a recognised professional accountancy body, or sixteen years of relevant education, together with a minimum three years of relevant securities/financial-sector experience for the responsible securities adviser or relevant corporate officer. It also addresses Institute of Financial Markets certifications, including the regulatory time allowance for company personnel. Certification should be confirmed against SECP's currently specified modules rather than assumed from a general degree.

Other regulated entities. An investment-advisory-services NBFC may act under the conditional exemption in regulation 3; it does not acquire a blanket exemption from applicable conduct and association obligations. Scheduled banks, microfinance banks, qualifying non-bank microfinance companies and electronic-money institutions have a distinct distribution-only pathway with intimation and annual compliance requirements, not an unrestricted exemption for securities recommendations. Brokers may use the integrated application provision where its exact category and conditions apply.

Not the same as distribution. A distributor of CIS or VPF units is subject to a separate reduced net-worth and fee category. A person holding a distributor-only licence must not present it as authorisation for independent securities advice. Exclusions for publications or broadcasts depend on the statutory definition and actual principal purpose; social-media activity is not automatically exempt.

Documents and conditional evidence

Regulation 5 requires Form A, the evidence in the 2023-revised Annexure B, and the fee receipt. Prepare the application as a single indexed file. The statutory annexure requires different material depending on whether the applicant is an individual, a newly incorporated company, an established business or an institutional sponsor.

• Applicant's identity, current business and contact addresses, NTN, business history, and incorporation/commencement particulars where applicable.
• Sponsor, director and senior-management particulars, including other directorships, partnerships or offices during the preceding ten years and associated SECP-licensed entities.
• FBR-filed wealth statement for an individual or relevant promoter, comparable evidence for a foreign national, or audited financial statements where the promoter is a corporate entity.
• Disclosures of relevant outstanding proceedings and regulatory penalties, with supporting explanations rather than unsupported negative declarations.
• Business premises, manpower, information systems, record-custody arrangements and evidence of the required continuing net worth.
• Annexure A fit-and-proper documents, qualifications, experience and current professional certifications for the applicant and relevant personnel.
• Certified constitutional documents, incorporation records and applicable corporate forms or audited accounts where the applicant is a company and the annexure calls for them.
• Authorised signatory/board resolution where relevant, the completed statutory application, fee evidence and any further material specifically requested by SECP.

The 2023 notification replaced Annexure B and removed some older documentary repetition. Do not insist on an obsolete checklist item merely because it appeared in a 2021 PDF. Conversely, the Commission may seek additional information under regulation 5(3), and the facts of an applicant with foreign ownership, disciplinary history or another regulated activity may require further verification.

Application procedure: eight practical stages

1. 01
   Classify the actual service before incorporating

   Document whether the proposed business will make securities recommendations, issue analyses directed at investment decisions, advise on non-custodial securities portfolios, merely distribute CIS/VPF units, execute trades, or exercise discretion over client assets. These activities are not interchangeable. The securities adviser definition in the regulations includes investment recommendations and specified analysis, but excludes narrowly described general publications and broadcasts; a paid recommendations channel cannot assume that a media label alone creates an exemption.

2. 02
   Choose the eligible applicant and test its background

   For a company, confirm registration under the Companies Act, permitted objects, a Pakistan place of business, fit-and-proper sponsors, directors and senior managers, and the responsible adviser's qualifications. For an individual, confirm the separate regulation 4 route, mandatory certifications, fit-and-proper suitability, FBR Active Taxpayer List status, and the prohibition affecting individuals employed by financial institutions. A bank, NBFC or distributor must be assessed under its own limited or conditional route.

3. 03
   Verify capital, professional competency and association membership

   Regulation 6 distinguishes a full securities adviser from a distribution-only licensee. Assemble evidence that the applicable net worth is maintained, not merely promised. For the full advisory category, the responsible individual or the company's chief executive/head of advisory business ordinarily needs the Annexure A qualification and relevant three-year experience test. Confirm the currently specified Institute of Financial Markets certification and approved association requirements; retain evidence of each.

4. 04
   Build Form A and Annexure B evidence

   Use Form A prescribed by regulation 5 and the revised Annexure B, not an obsolete generic NBFC application. Include the business description, contact and incorporation particulars where relevant, owners and officers, ten-year positions, any SECP-licensed associates, relevant wealth statements or audited accounts, litigation and regulatory history, infrastructure and records arrangements, financial-resource evidence, fit-and-proper declarations, and qualification documents. Include conditional corporate records only where applicable.

5. 05
   Pay the correct application fee and submit to SECP

   Schedule I, substituted in June 2023, specifies PKR 20,000 for an individual securities-adviser application and PKR 40,000 for a corporate application. The licence fee for futures advice is separate if both authorisations are sought. Obtain the current SECP payment instructions and designated account or electronic channel directly from SECP before remitting; the regulations do not themselves establish a guaranteed end-to-end online filing portal or processing period.

6. 06
   Respond to SECP examination without changing the facts silently

   The Commission may request clarifications, additional documents, credit information and an assessment or premises visit. Under regulation 5(5), subsequent changes in application information must be intimated within seven working days. Maintain a query register, approved corporate resolutions where required, the submitted document versions and proof of each response. A filed application does not itself confer authority to solicit clients as a licensed adviser.

7. 07
   Start advisory engagements only after authorisation

   SECP may issue a one-year licence in Form B if statutory and public-interest tests are met. Before providing advice, implement a written client agreement, risk disclosure, suitability and KYC process, conflicts and remuneration disclosures, complaint handling and records. Do not use an adviser licence to hold customer assets, execute brokerage orders or manage discretionary portfolios without separately checking the applicable authorisation.

8. 08
   Renew and maintain the business after launch

   Apply in Form C one month before licence expiry, with compliance undertaking and the non-refundable Schedule I renewal fee: PKR 10,000 for an individual and PKR 20,000 for a company. Maintain net worth and professional eligibility throughout the year. Review advertising, employee dealing, customer complaints, annual filings and any proposed changes in control or business scope. Where a timely renewal application remains undecided, regulation 8 contains a continuation provision, subject to its terms.

Official filing materials: Consolidated Securities and Futures Advisers Regulations (June 2023) ↗; SECP licensing guidance ↗. The prescribed forms are annexed to the regulations. Obtain the currently accepted filing channel and payment instructions from SECP before submitting; no fixed statutory approval time is promised here.

Financial resources, application fees and renewal

Full securities advisory business: regulation 6 prescribes minimum net worth of PKR 1 million for a company and PKR 500,000 for an individual, to be maintained at all times. For a company, net worth is calculated as total assets less total liabilities and less revaluation surplus on fixed assets, subject to SECP clarifications. This is a continuing financial condition, not an application charge.

Distribution-only category: the 2023 amendment reduced the separate distributor threshold to PKR 500,000 for a company and PKR 250,000 for an individual. These lower figures must not be used for a full securities adviser.

Licence fees: Schedule I (as substituted by S.R.O. 742(I)/2023) sets a PKR 20,000 individual / PKR 40,000 corporate securities-adviser application fee and PKR 10,000 individual / PKR 20,000 corporate renewal fee. The distributor-only fees are PKR 5,000 for an individual and PKR 10,000 for a company, for either application or renewal. The schedule says fees for securities and futures adviser licences are charged separately; applicable collection charges may also arise.

An applicant should not confuse regulatory net worth, incorporation costs, licence fees, professional certifications and any third-party association subscriptions. Verify the current designated payment method and whether any later enacted fee amendment has been notified before payment.

Conduct rules and continuing compliance

Client engagement and suitability. Regulations 11–13 govern advertisements, written client agreements, risk disclosures and conflicts. For a full adviser, the customer should receive a signed mandate identifying services, remuneration, termination rights and responsibilities; a risk disclosure suited to the customer's circumstances; and clear explanations of relevant investment risks. Advice must be supportable by customer information, product characteristics and recorded rationale.

Conflicts and remuneration. Disclose links to issuers, intermediaries, commissions and other interests that could impair objectivity. Where the adviser also carries on another business, separate advisory activities and manage proprietary-trading conflicts. Do not portray issuer-paid or intermediary-paid recommendations as independent without appropriate disclosures. Distribution-only arrangements have specific contractual and compensation rules and must be assessed separately.

Records and reporting. Keep KYC, risk profiling, advice rationale, customer agreements, communications, complaint and transaction-related records in the form required by the regulations. The consolidated framework includes record retention and financial reporting obligations; the applicable return differs between corporate and individual licensees. A company should also reconcile annual accounts and audit obligations with the Companies Act and SECP directions. Do not assume that an individual files identical corporate audited accounts.

Digital advisory. S.R.O. 742(I)/2023 introduced data-protection and cybersecurity requirements and a 15-day prior intimation requirement before launching a digital advisory/distribution platform. Digital onboarding, algorithms, online recommendations and social-media marketing must be reviewed for regulated advice, security and fair customer communications. A website launch does not replace a licence.

Renewal and changes. The licence is issued for one year. Regulation 8 requires renewal application one month before expiry, and regulation 5(5) requires changes in application particulars to be notified within seven working days. The regulator may refuse, suspend or cancel a licence for relevant non-compliance; client liabilities do not disappear on cancellation.

Governing law, amendments and primary sources

The core legal instruments are the Securities Act, 2015 and the Securities and Futures Advisers (Licensing and Operations) Regulations, 2017 (S.R.O. 274(I)/2017). S.R.O. 49(I)/2021 introduced the individual route; S.R.O. 742(I)/2023 revised eligibility, distribution, documentary evidence, digital obligations and fees. The consolidated version published by SECP as updated through 15 June 2023 should be used instead of relying on older fee schedules.

The June 2022 public-consultation draft was not itself enacted law. The changes actually notified in June 2023 must be read in their final form. A search of SECP's public regulations and notifications listings did not identify a later consolidated securities-and-futures-adviser amendment through the current review, but any applicant should recheck subsequent notifications before filing. The licensing webpage is explanatory; the enacted instrument controls in a discrepancy.

• SECP: consolidated advisers regulations, updated 15 June 2023 ↗
• SECP: S.R.O. 742(I)/2023 enacted amendments ↗
• SECP: S.R.O. 49(I)/2021 individual eligibility amendment ↗
• SECP: original 2017 notification ↗
• SECP: licensing and renewal guidance ↗
• SECP: notifications register ↗

How Chambers can assist

Chambers can assess whether a proposed advisory model falls within the Securities Act, identify the correct applicant and licence category, review corporate objects and governance, verify net-worth and certification evidence, prepare Form A and its Annexure B file, and respond to regulator queries where instructed. For an existing adviser, the work may instead involve a renewal, a digital-platform launch, a change of control or a review of client documents.

An initial enquiry should describe the advice to be provided, whether clients are retail or institutional, whether the applicant is a company or an individual, and whether any custody, brokerage, distribution or portfolio-management activity is proposed. Confidential client or identity documents should be shared through an appropriate secure channel.