Body corporate
An entity with a legal existence separate from the persons forming it, as defined in Section 2(11) of the Companies Act, 2013. Only a body corporate can register with SEBI as a portfolio manager.
In plain language
A body corporate is, broadly, a company-like body that exists in law in its own right. Its legal status is fully separate from its members. It can own property in its own name. It can sign contracts. It can be sued.
Why does this matter in XXI-B? For one practical reason. SEBI defines a portfolio manager as a body corporate. Under a contract with a client, that body manages or runs a portfolio of securities or the client's money. It may advise, direct or do the work itself.
Before SEBI grants registration, it checks whether the applicant is a body corporate.
So a single person, however skilled, cannot be registered as a portfolio manager in their own name.
How it works
The statutory definition (Chapter 7, section 7.3). Section 2(11) of the Companies Act, 2013: "body corporate" or "corporation" includes a company incorporated outside India, but does not include:
- a co-operative society registered under any law relating to co-operative societies; and
- any other body corporate (not being a company under the Act) that the Central Government notifies.
In simple terms, the workbook says, a body corporate includes a private company, public company, one person company, small company, limited liability partnership, foreign company etc.
Where the term appears in the workbook:
| Context | Chapter |
|---|---|
| Definition of portfolio manager | Chapter 1 (section 1.6.3.3), Chapter 7 (sections 7.1, 7.3) |
| Registration test: "the applicant is a body corporate" — with infrastructure, a compliance officer and a qualified principal officer | Chapter 7 (section 7.4) |
| SCRA definition of securities — shares, bonds, debentures etc. of any incorporated company, pooled investment vehicle or other body corporate | Chapter 2 (section 2.1) |
| Entities that can invest in PMS (minimum ₹50 lakh) include body corporate | Chapter 8 (section 8.1) |
| Code of conduct: the PM must obtain in writing the client's interest in corporate bodies that could give access to unpublished price-sensitive information | Chapter 11 (section 11.4.1) |
A worked example
Illustrative figures. Three people with twenty years of fund management experience each want to offer PMS.
| Proposed structure | Body corporate? | Can register as portfolio manager? |
|---|---|---|
| Ms. Rao alone, as a proprietor | No | No |
| Rao, Shah and Iyer as a co-operative society | No — excluded by Section 2(11) | No |
| Rao Capital Private Limited, a company | Yes | Yes, if the other conditions are met |
They choose the private limited company. SEBI will then also check that it has adequate office space, equipment and staff, has appointed a compliance officer, and has a principal officer with a recognised professional qualification, at least five years' relevant experience and the specified NISM certification.
On the client side, a manufacturing company — also a body corporate — wants to place ₹3 crore of surplus funds with Rao Capital. That is above the ₹50 lakh minimum, and body corporates are among the entities eligible to invest in PMS.
Why NISM asks about it
Chapter 7 (Role of Portfolio Managers), sections 7.1, 7.3 and 7.4, defines the portfolio manager as a body corporate, quotes Section 2(11) of the Companies Act, 2013, and makes body-corporate status a registration condition — Chapter 7's sample question 4 lists it among the registration requirements. Chapter 1, Chapter 2 (SCRA definition of securities), Chapter 8 (eligible PMS investors) and Chapter 11 (code of conduct) use the same term.
Common exam traps
- Co-operative societies are not bodies corporate under Section 2(11).
- A company incorporated outside India is included.
- Section 2(11) of the Companies Act, 2013 — not the SEBI Act and not the SCRA.
- The workbook is inconsistent on LLPs. Section 7.3 says body corporate, in simple terms, includes limited liability partnerships; yet section 8.1 lists Limited Liability Partnership and Body Corporate as separate categories of PMS investors. Treat an LLP as a body corporate for the definition question, and expect both labels in list questions.
- Registration requires more than body-corporate status: infrastructure, a compliance officer and a qualified principal officer as well — "all of the above" in the sample question.
Check yourself
1.Which of the following entities is NOT eligible to invest in a PMS?
- a)Proprietorship firms
- b)Association of persons
- c)Partnership firms
- d)None of the above
Show the answer
Answer: (d) None of the above
This is the workbook's own sample question. All three — proprietorship firms, associations of persons and partnership firms — appear on the list of eligible entities, along with individuals, NRIs, HUFs, LLPs, trusts and body corporates.
So the answer is none of the above. Candidates who assume a proprietorship is "too small" to count get this wrong.
Where this is taught
- Series XXI-B · Chapter 7: Role of Portfolio Managersintroduced here
- Series X-A · Chapter 12: Portfolio Managerintroduced here
Related terms
- Principal officerThe named individual at a non-individual intermediary who carries personal regulatory responsibility for the advisory business, and who must personally hold the prescribed qualification and NISM certification.
- Compliance OfficerThe separately appointed officer of a merchant banker, listed company or intermediary who monitors compliance with securities law, handles investor grievances, and reports non-compliance to SEBI independently.
- Portfolio Management ServicesA tailored investment service where the client owns the securities directly in their own name, regulated under the SEBI (Portfolio Managers) Regulations, with a minimum investment of Rs 50 lakh.
- Portfolio managerA body corporate registered with SEBI that, under a contract with a client, advises on or manages that client's securities or funds — discretionary, non-discretionary or advisory.
- SecuritiesFinancial instruments — shares, bonds, derivatives, mutual fund units, government securities and more — issued to raise funds, as defined in Section 2(h) of the Securities Contracts (Regulation) Act, 1956.