SAMRIDDHI PMS GUIDELINES 2074

BACKGROUND

To ensure clarity, transparency and consistency on managing and advising Client’s portfolio,
Samriddhi Capital, including all its members and employees shall duly comply the terms and
conditions set in this guideline in managing and advising client’s portfolio.

This guideline shall come into effect from 4th of Janaury 2018; as approved by decision of board
members of Samriddhi Capital ltd. Appropriate changes, amendments and modifications in this
guideline shall be made as and when deemed necessary.

INTRODUCTION:

Samriddhi Portfolio Management Service (PMS)

Portfolio Management Service (PMS) is a tailor made professional service offered to cater the
investments objective of different investor classes. The Investment solutions provided by PMS
cater to a niche segment of clients. The clients can be Individuals or Institutions entities with
high net worth. In simple words, a portfolio management service provides professional
management of your investments to create wealth.

Under PMS, Samriddhi Capital offers two services:

1. Discretionary Portfolio Management service

2. Non-Discretionary Portfolio Management service

Discretionary Portfolio Management Services (PMS): The discretionary portfolio manager

individually and independently manages the funds of each client in accordance with the needs
of the client. Under discretionary PMS, independent charge is given by the client to the
portfolio manager to manage the portfolio/fund

The non-discretionary portfolio manager manages the funds in accordance with the directions
of the client. Thus under Non-Discretionary PMS, the portfolio manager will provide advisory
services enabling the client to take decisions with regards to the portfolio. The choice as well as
the timings of the investment decisions rest solely with the investor. However the execution of
the trade is done by the portfolio manager. Since in non-discretionary PMS, the portfolio
manager manages client portfolio/funds in accordance with the specific directions of the client,
the PMS Manager cannot act independently.
 SAMRIDDHI PMS GUIDELINES 2074

(A) Discretionary PMS

01. Authorized Signatory on agreement: On behalf of Samriddhi Capital; PMS Manager or

assigned relationship manger or any office bearer not below officer level shall assign
signature in agreement with client and related legal documents along with company
Seal on each signature.
02. Opening of Bank Account: The PMS Manager shall open Client’s bank account in any of
class “A” commercial Bank.
03. Opening of DP Account: Unless opened by Samriddhi capital itself, the client’s DP
account shall be opened and operated only in any DP service provided by class “A”
Commercial Bank or by their subsidiary.
04. Signatory relating to Bank and Depositary Participant (DP) Account:
As mentioned in separate PMS agreement with the client and on basis of power of
attorney exercised by Samriddhi Capital on behalf of client, Samriddhi Capital shall
open, operate and close Bank/DP account in name of Client. The signatures on behalf of
client shall be operated by any two signatures – one compulsory from management and
other one compulsory from non-executive Board members. For smooth operation, four
signatures, two from management and two from non-executive board member shall be
defined. Along with signatures, company stamp shall be made mandatory. The name of
signatories shall be defined by Board meeting of Samriddhi Capital.
05. Products: No Products without approval from Board of Samriddhi Capital and not
informed to Securities Board shall enter in agreement with client.
06. Principal Investment: Samriddhi Capital shall accept Cheque or Stocks as client’s initial
investment for PMS. If received in form of stocks, the value of initial investment shall be
obtained by restructuring stocks that Portfolio manager takes into custody. The
maximum period for restructuring shall be 15 days. In the process, stocks held on others
name beside client’s own name shall all be subject to restructuring or disposal, and even
stocks that have original buy price or base price of more than 20% below current market
price are all subject to disposal. Even stocks that do not meet client’s investment
objective, based on company’s internal assessment shall all be subject to disposal
making clear the logic of disposal in writing and signed for maintaining record in client’s
file.
07. Fees: No fees or charges of any kind and above prescribed limit shall be levied on clients
account above identified and prescribed by this guideline.
Following Fees and charges with prescribed limit shall be charged to client for
Discretionary PMS
 SAMRIDDHI PMS GUIDELINES 2074

Fees/Charges Nature Limit

(a) Documentation Fee One time (Upfront) NRS.0-5000/ 0% - 1%
(b) Management Fee Annual Min. NRS. 2500/0.25% - 1.5%
(c) Hurdle rate Annual Min.8%; Max. 12%
(d) Performance Fee Annual 15-20% above hurdle rate
(e) Exit load On premature exit 0-5% of Total Portfolio Value

*NOTE: Other charges like brokerage, bank charges/renewals, DP charges/renewals and

similar charges and expenses during operation of client account shall be borne by client
him/herself.

08. Fee Charging structure:

(a) Documentation fee: Documentation fee shall be charged one time and not exceed
1% of Principal investment. On discretion of PMS Manager or relationship manager,
this fee may be waved out wholly.
(b) Management Fee: This shall be annual fee, charged upfront for a year and renewed
at yearly expiry of agreement every year until period of contact. No annual
management fee below NRS.2500 or above 1.5% of annual portfolio size shall be
charged by Samriddhi Capital.
(c) Performance Fee: Performance Based Fees will be charged only, when there are
incremental profits above agreed hurdle rate and not on all the profits. This is
known as High Watermarking. High Watermarking would be adjusted for infusion
and withdrawal. Performance Based Fees will be charged for all accounts opened
during the year till last date of Ashad month. It would subsequently be normalized
on a financial year-basis i.e. Shrawan 1 to Ashad last. Return for the purpose of
calculation of Performance Based Management Fees shall be ascertained as on the
date the fees will be charged i.e. on last date of Ashad every year.

9. Withdrawals: Withdrawals, in form of profit or capital, from PMS would be as referred

by product paper and agreement, or even with the mutual consent of the client and the
Portfolio Manager in writing. The withdrawals may be in form of shares or in cash at the
end of the agreed period as per the terms & conditions of the Portfolio Investment
Management Agreement. All Withdrawals shall be for a minimum amount of One Lakh
Rupees. Acceptance and processing of applications for withdrawal of Assets less than
one lakh Rupees shall be at the discretion of the Portfolio Manager, with appropriate
maintenance of record in writing in client’s file. Exit Fee will be charged on premature
Withdrawals, depending upon product of PMS and initial agreement. In case of
withdrawals in the form of securities, Exit fee will be charged on the Net Asset Value of
the securities withdrawn.
 SAMRIDDHI PMS GUIDELINES 2074

10. Additions: Additions to existing portfolio of not less than one lakh rupees shall be
allowed. All such additions must be documented in writing on mutual consent of client
and portfolio manager. However, for product specially designed to achieve advantage of
systematic investment Plan (SIP), any amount of additions may be allowed on any
frequency. The client shall be provided with their bank account to make such recurring
additions. The portfolio manager shall update and document such additions in client’s
respective account every quarter end as per Nepali calendar.

11. Request for change in fee structure: In case of request for change in fee structure in
writing by any client, the new structure will be effective from the beginning of the
subsequent financial year after the date of the request i.e from 1st Shrawan. All terms
and conditions as per the new structure will be applicable. NAV for the purpose of
calculating returns for charging performance based fees will be reset to the opening
NAV as on the day the new fee schedule will be effective.

12. Request for change in product/strategy: Any Request in writing, for change in
strategy from existing Product/Strategy to any other product/strategy, shall be subject
to a Portfolio Rebalancing/Restructuring charge of maximum of Five Thousand rupees or
0.5% of the value of the Assets required to be managed using the new product/strategy.
If existing portfolio attracts exit charge, the charge shall be carried forward to new
product/strategy. Other fees and charges shall be as per new product paper.

13. Agency: For rapid expansion of client’s base, in order to penetrate larger network
and to increase the size of asset under management, Samriddhi Capital shall
continuously create and expand network of registered agencies that carry and promote
Samriddhi Portfolio product and services. Along with external agents, Samriddhi capital
shall develop in-house sales team that work on day to day basis to meet company’s
sales target.

14. Agency Commission: The commission to be paid to external agents shall be as

defined by separate agency commission schedule that forms the integral part of this
guideline. The in-house sales commission above monthly compensation to sales team
shall be 75% of commission to external agency.

(B) Non- Discretionary PMS

Under Non-Discretionary Portfolio Management Service, normally the Client exercises

all functions of Execution, custody and accounting; whereas Portfolio manager give
investment advice and may carry out transaction and other administrative functions on
request of client. Samriddhi Capital shall charge annual service fee of maximum of fixed
Fifty Thousand Rupees or 0.5% -2% annually of portfolio Size. Such service fee may be
 SAMRIDDHI PMS GUIDELINES 2074

charged on monthly, quarterly or annual basis agreed in writing. In addition to annual

service fee, Performance fee based on annual performance may be charged annually
above mutually agreed hurdle rate on discretion of portfolio manager.