Under the new framework, a portfolio manager can now offload specific investment approaches or the entire PMS business to another Sebi-registered entity within the same group. However, if the entire business is transferred, the transferor must surrender their PMS registration within 45 working days of completion.
In case of transfer of only certain investment approaches, the transferor may continue to hold a certificate of PMS registration, the circular said.
For transfers outside the group, Sebi has made a joint application procedure mandatory, where both the transferring party and the acquiring party have to seek regulatory approval. In such cases, only a complete transfer of PMS activities is permitted; certain investment approaches cannot be moved separately.
The acquirer’s portfolio manager will also assume responsibility for all pending litigation, litigation and obligations of the transferor, with commitments to that effect required as part of the approval process. SEBI has directed that the transfer process must be completed within two months from the date of approval, following which the transferor must surrender his vehicle registration certificate.
The new norms come into effect immediately and provide a structured and transparent mechanism for PMS transfers while protecting investors’ interests. The circular has been issued under Section 11(1) of the SEBI Act, 1992 read with Regulation 43 of the SEBI (Portfolio Managers) Regulations, 2020, which gives the regulator the power to protect investors and ensure orderly development of the securities market.
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