The Securities and Exchange Board of India (SEBI) has introduced a new framework enabling registered portfolio managers to transfer Portfolio Management Services (PMS) business between themselves, marking a significant move toward regulatory flexibility and ease of doing business in the PMS space. Earlier, PMS business transfers were largely linked to change in control events such as mergers and acquisitions and involved more rigid approvals and processes.
Under the new circular (SEBI/HO/IMD/RAC/CIR/P/2025/0000000138), SEBI now permits:
- Transfer of entire PMS business or select investment approaches between portfolio managers belonging to the same group, with surrender of registration required if the whole business is transferred.
- Transfer of PMS business to a portfolio manager outside the group, subject to a joint application by the transferor and transferee and a mandatory full business transfer, with partial transfer of only select strategies not allowed.
In all cases, prior SEBI approval is compulsory, and the transfer process must be completed within two months of approval. The transferee must assume all rights, obligations, pending actions, and litigations of the transferor, supported by detailed undertakings and documentation such as business transfer agreements, client lists, and board resolutions.
The circular is positioned as an investor-protection oriented reform that also offers operational flexibility. It ensures continuity of service for PMS clients while giving portfolio managers a clear, time-bound process to reorganize, consolidate, or exit PMS operations without triggering change-in-control requirements or NCLT proceedings in every case.