Overview

The Securities and Exchange Board of India (“SEBI”) has by a Circular dated October 24, 2025, introduced a framework for the transfer of Portfolio Management Service (“PMS”) businesses from one Portfolio Manager to another. The circular seeks to simplify the regulatory process and facilitate ease of doing business while ensuring investor protection. The provisions take effect immediately.

Key Highlights

A. Prior SEBI approval required

All transfers of PMS businesses, whether intra-group or inter-group, require prior approval from SEBI.

B. Intra-group transfer (between Portfolio Managers within the same group)

  • Scope: Portfolio Managers within the same group may transfer either selected Investment Approach(es) or the entire PMS business.
  • Registration Impact:
  • If the entire business is transferred, the transferor must surrender its PMS registration within 45 working days of completion.
  • If only select approaches are transferred, the transferor may retain its registration and continue other business activities.

C. Transfer to an unrelated Portfolio Manager (outside the group)

  • Joint Application: The transferor and transferee must jointly apply to SEBI.
  • Scope of Transfer: Only full-business transfers are permitted; selective transfers are not allowed.
  • Liability: The transferee assumes responsibility for all acts, deeds, pending actions/litigations, and other obligations of the transferor effective from the date of regulatory approval and/or business handover.
  • Timeline: The transfer must be completed within two months of SEBI’s approval. During this period, the transferor may continue managing existing clients but cannot onboard new ones.
  • Surrender of Registration: Upon completion, the transferor must surrender its PMS registration certificate.
  • Undertakings:
  • The transferee must submit an undertaking (Annexure I) assuming responsibility for all obligations of the transferred business.
  • The transferor must submit an undertaking (Annexure II) confirming client consent, compliance with applicable laws, and commitment to surrender its registration post-transfer.

Conclusion

This circular brings much-needed clarity on how PMS businesses can be transferred. By outlining clear procedures and timelines, SEBI has made the process more flexible while continuing to protect investors. The new framework should make it easier for Portfolio Managers to reorganize, consolidate, or exit their PMS operations in a structured and compliant manner.

This insight has been authored by Swapneil Akut and Abhishek Singh from S&R Associates. They can be reached at [email protected] and [email protected], respectively, for any questions. This insight is intended only as a general discussion of issues and is not intended for any solicitation of work. It should not be regarded as legal advice and no legal or business decision should be based on its content.