Sebi allows transfer of PMS business to simplify operations, ease compliance burden

Synopsis

Sebi has permitted portfolio managers to transfer their PMS business—partially or fully—after regulatory approval. The move aims to simplify compliance, improve business flexibility, and ensure investor protection under new transfer norms effective immediately.

Securities and Exchange Board of India (Sebi) has allowed portfolio managers to transfer their Portfolio Management Services (PMS) business after obtaining approval from the regulator. In a circular today, the market watchdog stated that the initiative is part of its broader efforts to promote ease of doing business and simplify compliance in the capital market ecosystem.

Under the new framework, a portfolio manager can now transfer either 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 its PMS registration within 45 working days of completion.

In case of transfer of only select investment approach (es), the transferor may continue to hold certificate of PMS registration, the circular said.

For transfers outside the group, Sebi has made a joint application process mandatory, requiring both the transferor and transferee to seek regulatory approval. In such cases, only a complete transfer of PMS business is permitted—select investment approaches cannot be moved separately.

The transferee portfolio manager will also assume responsibility for all pending actions, litigations, and obligations of the transferor, with undertakings to that effect required as part of the approval process. SEBI has mandated that the transfer process be completed within two months from the date of approval, after which the transferor must surrender its registration certificate.

The new norms come into effect immediately, providing a structured and transparent mechanism for PMS transfers while safeguarding investor 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, empowering the regulator to protect investors and ensure orderly development of the securities market.

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