SEBI Allows Transfer of PMS Business Between Portfolio Managers to Simplify Operations and Enhance Ease of Doing Business [Read Circular]

According to the circular, SEBI will now permit Portfolio Managers to transfer either their entire PMS business or specific investment approaches to another SEBI-registered Portfolio Manager. This move is expected to make business transitions smoother, reduce compliance delays, and ensure better continuity of client services.

For transfers between Portfolio Managers within the same group, SEBI has said that the transferor may move part or all of its PMS business to another group entity. If the entire business is transferred, the transferor must surrender its PMS registration within 45 working days after the completion of the transfer. However, if only certain investment approaches are transferred, the firm can continue its PMS operations for the remaining clients.

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For transfers between unrelated Portfolio Managers, both the transferor and transferee must submit a joint application to SEBI for approval. In such cases, the entire PMS business must be transferred, as partial transfers are not permitted. The transferee must also fulfil all regulatory requirements and take over the liabilities, obligations, and pending actions of the transferor. The entire process must be completed within two months from the date of SEBI’s approval.

The circular requires both parties to submit formal undertakings confirming the transfer, including details of client consent, business transfer agreements, and compliance certifications. The transferor must also inform all clients about the transition and ensure their approvals are obtained where necessary.

SEBI said that the new framework will streamline PMS operations, enhance investor protection, and ensure regulatory accountability. The circular has come into force with immediate effect and is issued under Section 11(1) of the SEBI Act, 1992, read with Regulation 43 of the SEBI (Portfolio Managers) Regulations, 2020.

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