SEBI Permits PMS Business Transfer Between Registered Managers with Prior Approval

The Securities and Exchange Board of India (SEBI) has introduced an operational shift for Portfolio Management Services (PMS) by allowing registered managers to transfer their business, fully or partially, to other registered managers. This decision is aimed at streamlining compliance and promoting business ease in the PMS sector.

SEBI Allows Full or Partial PMS Transfers

Under the newly outlined framework, SEBI permits intra-group transfers of PMS business, either entirely or in part. When transferring within the same group, both entities must be SEBI-registered. 

For full transfers, the original manager must surrender its registration within 45 working days post-transfer. Partial transfers of specific investment approaches are also allowed without losing registration.

Only Full Transfers Permitted Outside Group

When transferring PMS business to a manager outside the group, SEBI mandates a complete transfer only. The process requires a joint application and a formal undertaking by the transferee to assume all existing responsibilities, litigations, and obligations. No partial transfers are allowed between unrelated entities.

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Regulatory Timelines and Client Communication

SEBI has set a strict deadline where all documentation and transfer formalities must conclude within 2 months from the date of approval. The transferring manager must continue acting as a Portfolio Manager during the process, but cannot onboard new clients until transfer completion. Both parties are required to communicate transparently with clients and furnish necessary undertakings and supporting documents such as board resolutions, transfer agreements, and client lists.

Immediate Implementation Effective Through Circular

SEBI’s circular has been enforced with immediate effect from October 24, 2025. This regulatory change provides PMS firms with strategic flexibility for restructuring and scaling operations, aligning business decisions with investor protection mechanisms and SEBI's oversight requirements.

Conclusion

SEBI’s latest move, enabling PMS transfers between registered managers, is a constructive regulatory update. It empowers managers with operational ease while ensuring accountability through structured compliance and client safeguarding processes.

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