INTERNAL CONTROL POLICY

Background

Phaedrus Advisory LLP (“Phaedrus”) is a SEBI registered Non-Individual Registered Investment Advisor (RIA), engaged in providing investment advisory and wealth management services to clients across various strategies and mandates. The operations of Phaedrus are guided by the provisions of the SEBI (Investment Advisers) Regulations, 2013, as amended from time to time, along with the relevant circulars and guidelines issued thereunder.

Phaedrus may also be associated with affiliates engaged in other financial services, such as distribution, research, or offshore advisory. Given the multifaceted nature of these operations, there exists the possibility of actual or perceived conflicts of interest across entities, clients, and service lines.

This Internal Control Policy provides a framework for identifying, avoiding, managing, and disclosing potential conflicts of interest, and for maintaining the primacy of client interest in all business activities. It is the responsibility of Senior Management to ensure that appropriate systems and procedures are in place. The Risk Management/Compliance Committee will assist in identification, monitoring, and oversight of such conflicts.

Applicability

This policy applies to all employees, consultants, and partners of Phaedrus Advisory LLP.

DEFINITIONS AND GUIDING PRINCIPLES

To mitigate and manage conflicts of interest, Phaedrus adheres to the following:

1. Client First: Always act in the best interest of clients/investors and ensure fairness across services and offerings.
2. Integrity: Maintain the highest standards of ethical conduct and avoid any action that could prejudice the firm’s fiduciary responsibilities.
3. Independence: Ensure independent decision-making between different business lines (e.g., advisory vs. execution support).
4. Transparency: Disclose potential or actual conflicts of interest to clients where their interests may be affected.
5. Governance: Establish Chinese walls, dealing codes, and pre-clearance protocols to restrict information flow and potential abuse.
6. No Preferential Treatment: Ensure that no scheme, client, or group of clients receives undue preference over others.
7. No Front-Running or Misuse: Employees must not trade on confidential or non-public information.
8. Independent Research: External and internal research shall be reviewed with objectivity; no undue reliance on any affiliate’s views.

TYPICAL AREAS OF POTENTIAL CONFLICTS

1. External Conflicts:
   Investment decisions must remain unaffected by other entities’ interests or market positioning.
2. Conflict between Advisory & Execution/Distribution:
   Phaedrus may offer non-binding execution support or coordinate with platforms for implementation. Advisory must remain product-neutral and aligned with client’s objectives and risk profile. Incentives or commissions, if any, must be disclosed.
3. Conflict among Clients:
   Conflicts may arise when providing services to multiple clients. Portfolio rebalancing, asset allocation, or securities recommendations must be aligned with each client’s stated strategy, without undue favoritism or compromise.
4. Conflict with Employees’ Personal Trades:
   Employees may be in possession of sensitive client or market information. All personal dealing must be reported, pre-cleared, and comply with the Employee Dealing Policy. Front-running and insider trading are strictly prohibited.
5. Conflict from Dual Roles:
   Employees or partners of Phaedrus must not undertake external assignments that may conflict with their professional obligations to the firm or its clients. All such engagements require Principal Officer’s approval.
6. Conflict in Product Design or Discretionary Mandates:
   Employees involved in designing investment products or mandates must not influence portfolio actions in favor of their own holdings or performance-linked products.

MEASURES TO MANAGE CONFLICTS

1. Chinese Walls: Functional segregation of departments (e.g., advisory vs. execution) to prevent information leakage.
2. Employee Dealing Policy: Mandatory reporting and pre-clearance of personal transactions.
3. Best Execution Policy: Objective, transparent processes for executing client transactions.
4. Disclosure Framework: Pre-investment disclosure of material affiliations, commissions, or potential bias.
5. Independent Supervision: Clear reporting lines with compliance oversight and periodic audits.
6. No Product Bias: Advisory staff compensation shall not be linked to sales of financial products.
7. Whistleblower Policy: Employees may escalate concerns without fear of retaliation.
8. Training & Awareness: Periodic sessions on fiduciary duties, regulatory obligations, and conflict management.

REPORTING & ESCALATION

If any employee, partner, or associated person becomes aware of a conflict not covered under this policy, the same must be reported to the Compliance Officer, Mr Govind Pathak (govind@phaedrus.co.in). If the Compliance Officer is involved in the conflict, the matter must be escalated to the Managing Partner or Board of Phaedrus Advisory LLP.

BREACHES & PENALTIES

Any breach of this policy will result in disciplinary action including but not limited to reprimand, reversal of transaction, suspension, termination, or referral to regulatory authorities, depending on severity.

REVIEW, AMENDMENTS & APPROVAL

The policy shall be reviewed annually or upon any material change in business or regulations. Any amendments shall be approved by the Compliance Committee and noted by the Board.