SEBI Slaps Rs3 Lakh Penalty on DGS Capital Management for Non-compliance
Moneylife Digital Team 06 October 2025
Market regulator Securities and Exchange Board of India (SEBI) has levied a penalty of Rs3 lakh on DGS Capital Management Pvt Ltd (DGS), a registered portfolio manager, for failing to comply with key provisions of the SEBI (Portfolio Managers) Regulations, 2020. The action follows an examination covering the period 1 January 2023 to 31 December 2024 which revealed serious lapses in net worth maintenance, reporting and certification requirements.
 
SEBI’s inspection noted that DGS failed to meet the minimum net worth requirement of Rs5 crore mandated under the Portfolio Managers Regulations. DGs’ filings with the Union ministry of corporate affairs (MCA) showed that the company net worth stood at only Rs1.64 crore for FY22-23 and Rs1.6 crore for FY23-24.
 
Despite SEBI reminders, DGS delayed compliance and only infused additional funds after receiving an interim order in February 2025. Subsequent net worth certificates indicated a rise to Rs5.15 crore as of 25 February 2025 and Rs5.29 crore as of 31 March 2025. Nonetheless, SEBI held that DGS remained in violation from 15 January 2023 to 24 February 2025.
 
The interim order also highlighted that DGS failed to submit required reports under the SEBI master circular for portfolio managers, including annual net worth certificates, compliance certificates and corporate governance reports for FY22-23 and FY23-24 within prescribed timelines.
 
Although the company later submitted the documents immediately after the interim order, the delay constituted non-compliance under clauses 5.2.1.1, 5.2.1.2, and 5.2.2.4 of the PM Master Circular 2024.
 
Further, SEBI found that DGS principal officer, Ashish Sharma, did not obtain the mandatory NISM series XXI-B portfolio managers certificate on time. Having been employed prior to the notification, he was required to be certified by 7 September 2023, but only achieved certification on 13 October 2024, leaving the company in breach of regulatory requirements for over a year.
 
The interim order had directed DGS to restore its minimum net worth, freeze onboarding of new clients and inform existing clients. SEBI also called upon the company to explain why additional directions, such as transferring activities to another portfolio manager or imposing market access restrictions, should not be imposed.
 
With assets under management growing from Rs99.12 crore in January 2023 to Rs201.03 crore in December 2024, SEBI underscored that net worth compliance is crucial for safeguarding investor interests.
 
While DGS has since complied with the interim order, including restoring net worth and submitting pending reports, SEBI imposed the Rs3 lakh penalty as punitive action for the violations.
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