Source: BS
Context:
The Securities and Exchange Board of India (SEBI) has allowed the transfer of Portfolio Management Services (PMS) businesses from one portfolio manager to another, subject to regulatory approval. The decision aims to bring greater operational flexibility, continuity of client services, and consolidation efficiency in India’s portfolio management industry.
Key Highlights of the SEBI Circular:
1. Transfer Permitted with SEBI Approval
- Portfolio managers can transfer their PMS business, either partially (specific investment approaches) or completely, to another manager after obtaining SEBI’s prior approval.
2. Intra-Group Transfers
- Transfers between portfolio managers within the same group are allowed for select investment approaches or the entire business.
- If the entire PMS business is transferred, the transferor’s PMS registration certificate must be surrendered within 45 days from completion.
3. Inter-Group Transfers
- If the transfer is between managers not belonging to the same group, a joint application must be filed with SEBI.
- In such cases, partial transfers are not allowed — the entire PMS business must be transferred.
4. Post-Transfer Obligations
- The transferee (receiving manager) must comply with all regulatory requirements.
- Upon completion, all pending actions, litigations, and obligations of the transferor become the responsibility of the transferee.
- A written undertaking confirming this assumption of responsibility must be submitted to SEBI.
Objective and Rationale
- To facilitate consolidation among portfolio managers for improved efficiency and scale.
- To ensure continuity of investor services without disruption during change of management.
- To enhance regulatory clarity and accountability between transferring and receiving entities.
- To support ease of doing business in India’s alternative investment and wealth management ecosystem.
About Portfolio Management Services (PMS)
Portfolio Management Services (PMS) are investment management services offered by SEBI-registered portfolio managers who manage clients’ investments in equity, debt, or hybrid portfolios for a fee, customized to investor objectives and risk appetite.
Key Features:
- Minimum Investment: ₹50 lakh (as per SEBI regulations).
- Types:
- Discretionary PMS: Portfolio manager takes all investment decisions.
- Non-Discretionary PMS: Decisions made with investor consent.
- Advisory PMS: Manager provides advice; execution is done by the investor.
