Under the new framework, a portfolio manager can transfer its PMS business only after obtaining prior approval from the Securities and Exchange Board of India (Sebi).
In cases where the transfer is between two portfolio managers belonging to the same group and both having valid PMS registrations, Sebi has permitted the transfer of certain investment approaches or the entire PMS business subject to certain conditions.
If the entire PMS business is transferred, the transferor must surrender its PMS certificate of registration within 45 working days of completion of the transfer.
However, if only selected investment approaches are transferred, the transferor can retain its PMS registration, Sebi said in its circular.
For transfers between portfolio managers not belonging to the same group, a joint application must be submitted to Sebi for approval by both the transferring party and the acquiring party. In such cases, the entire PMS activity must be transferred, as partial transfers of certain investment approaches are not allowed. In addition, the transferee must comply with all legal requirements and will assume responsibility for all pending actions, lawsuits and liabilities of the transferor once the transfer is completed. A commitment to this effect must be added to the joint application. The transfer process should be completed as soon as possible and not later than two months from the date of approval by Sebi. Until the process is completed, the transferor will continue to act as a portfolio manager but will not be allowed to onboard any new clients.
After completing all formalities or at the end of two months, whichever is earlier, the transferor must surrender his PMS registration certificate.
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