The Securities and Exchange Board of India (“SEBI”), in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, read with Regulation 43 of SEBI (Portfolio Managers) Regulations, 2020, vide Circular No.: SEBI/HO/IMD/RAC/CIR/P/2025/0000000138, dated October 24, 2025, introduced a mechanism to facilitate the transfer of Portfolio Management Services (“PMS”) business between registered Portfolio Managers (“Circular”).[1]
The measure aims to simplify operational processes, ensure continuity of client servicing, and provide flexibility to PMS entities undergoing restructuring, group realignment, or business consolidation.
Key Highlights of the Circular
- Prior Approval Requirement: A Portfolio Manager may transfer its PMS business only after obtaining prior approval from SEBI through the prescribed application process.
- Transfer Within the Same Group: Where both the transferor and transferee Portfolio Managers belong to the same group and hold valid PMS registrations:
- The transferor may transfer either select Investment Approach(es) or the entire PMS business to another Portfolio Manager within the group.
- If the entire PMS business is transferred, the transferor must surrender its PMS registration certificate within 45 (forty five) working days from the date of completion of transfer.
- In case of partial transfer (select investment approaches), the transferor may continue its PMS operations under the existing registration.
- Transfer Between Unrelated Portfolio Managers: Where the transfer is between Portfolio Managers not belonging to the same group:
- A joint application must be filed by both the transferor and transferee seeking SEBI’s prior approval.
- The transferor must transfer its entire PMS business, partial transfers are not permitted in such cases.
- The transferee is required to fulfill all regulatory obligations and assume all rights, liabilities, pending actions, and obligations of the transferor post-transfer. An undertaking to this effect (as per Annexure I of the Circular) must accompany the joint application.
- The transfer process must be completed within 2 (two) months from the date of SEBI approval. Until completion, the transferor may continue PMS operations for existing clients but cannot onboard new clients.
- On completion (or expiry of the 2 (two) month period, whichever is earlier), the transferor must surrender its PMS registration certificate, submitting an undertaking as per Annexure II of the Circular.
[1] https://www.sebi.gov.in/legal/circulars/oct-2025/transfer-of-portfolios-of-clients-pms-business-by-portfolio-managers-_97443.html