SEBI initiates process to transfer PMS business between portfolio managers
The procedure needs to be completed within 45 days
The Securities and Exchange Board of India (SEBI) is streamlining a process for transferring Portfolio Management Services (PMS) business from one portfolio manager to another to enhance business friendliness.
Under the new framework, a portfolio manager will be able to transfer the PMS business after obtaining prior approval from the market regulator. When the transfer takes place between two portfolio managers of the same group (both holding valid PMS registrations), SEBI will allow either the transfer of a select investment approach or the entire PMS business, on certain conditions.
If the entire PMS business is transferred, the transferor must surrender the PMS registration certificate within 45 working days of the completion of the transfer. However, if only the selected investment approach is transferred, the transferor may continue to hold the PMS registration.
Regarding transfers between portfolio managers not of the same group, a joint application must be submitted to SEBI for approval by the transferor and the transferee. Herein, the entire PMS business must be transferred, as partial transfers of select investment approaches are not sanctioned.
After the transfer is complete, the transferee must meet regulatory requirements and assume responsibility for all pending actions, litigations, and obligations of the transferor. The joint application must specify these details.
The process must be completed within two months after approval. Until then, the transferor will continue as a portfolio manager but will not be allowed to onboard new clients. After completion of all formalities (or at the end of two months, whichever is earlier), the transferor must surrender the PMS registration certificate.