Facilitating Seamless Transfers: SEBI’s Revised PMS Business Regulations

Introduction

The Securities and Exchange Board of India has issued a new circular that will allow the migration of Portfolio Management Services business to reduce the regulatory burden and, also, of course, to bring ease of doing business. This shall offer more flexibility and operational clarity to the portfolio managers without hampering the protection of investors.

The circular SEBI/HO/IMD/RAC/CIR/P/2025/0000000138 describes the framework and process for the transfer of Portfolio Management Service (“PMS”) business from one registered portfolio manager to another and also specifies the roles of the transferor and transferee as laid out under the SEBI (Portfolio Managers) Regulations, 2020.

Salient Features of the Circular[1]

1. SEBI Approval Must Be Obtained Prior: Before a Portfolio Manager can transfer any PMS business, they must obtain prior approval from SEBI. This requirement for SEBI’s approval assures stakeholders that the transferor PMS will comply with all appropriate regulatory requirements.

2. Transfer within the Same Group: A portfolio manager can transfer either specific Investment Approaches or the entire PMS business to another portfolio manager within the same group, provided both entities hold valid PMS registrations.

The below are essential terms of transfer:

Total PMS Business Transfer: If there is a transfer of the entire PMS, the transferor must return the PMS registration certificate within 45 working days of the completion of the transfer.
Transference of Specific Investment Practices: If specific investment practices involved in an investment are being transferred, then the transferor may continue to hold its registration certificate and operate the remaining side of its business.

This allows for group entities to quickly and effectively restructure, while still respecting investor-related concerns.

3. Transfers to Portfolio Managers Outside the Group

When a transfer occurs between portfolio managers who are not part of the same group, a joint application will be made to SEBI by the transferor and transferee.

Key aspects of this provision:

1. Complete transfer only: The transferor must transfer its entire PMS activity; partial transfer of any investment approach is not possible in these situations.

2. Assumption of liabilities: The transferee must assume responsibility for the whole of the transferor’s acts and deeds, pending actions, proceedings, and obligations. A formal undertaking (Annexure-I) acknowledging this will need to be submitted with the joint application.

3. Timelines of completion Transfer needs to be completed within two months from the date of approval from SEBI. The transferor may continue to act as portfolio manager for this two-month period until the completion of the transfer; however, no new clients can be taken on by the transferor.

4. Surrender of registration: After the transfer is completed and/or upon expiry of the two month period (whichever occurs first), the transferor is required to surrender their registration certificate, following prescribed standard procedure.

5. The transferor will also need to submit an undertaking (Annexure-II) confirming compliance with these requirements.

4. Undertaking and Documentation

As a requirement of the submission, both the transferee and transferor portfolio managers will be required to submit a detailed undertaking on their letterhead.

Transferee Undertaking (Annexure I)[2]

The transferee will take on full responsibility for all acts, deeds, current actions, litigation and obligations of the transferor and from the date of the regulatory approval or business transfer date.
The transferee has signing authority to provide such undertaking and must be signed by at least two directors or partners of the firm, and on letterhead.

Transferor Undertaking (Annexure II)

Transferor must confirm the following:

PMS Business Transfer Agreement: There is a formal agreement executed with the transferee to have all the rights, obligations, and liabilities attached to the PMS business transferred too.

Assign Rights and Obligations: All PMS agreements to be transferred, all assets, all client mandates, and all Power of Attorney (“POA”) will all be transferred upon completion.

Notification and Consent of Clients: All the clients have been properly notified, and all the clients have been obtained as appropriate.

Compliance Obligation: The transfer will be in full compliance with all applicable laws, and any violations will be corrected by the Transferor.

Surrender of Registration: The transferor agrees to surrender its SEBI registration certificate upon completion of the transfer. All the undertakings must be sealed with their relevant attachments, including,

• Board Resolution approving the transfer
• Business Transfer Agreement
• List of clients and Assets Under Management
• Communications with clients
• “Fit and Proper Person” certification (for SEBI Intermediaries Regulations)
• Effective Date and Authority

provisions of this circular will, henceforth, be effective immediately. This was issued under section 11(1) of the SEBI Act 1992, read with Regulation 43 of SEBI (Portfolio Managers) Regulations, 2020.

These policies are designed to protect the interests of investors, stimulate the market, and provide timely assessments of regulated financial markets in India.

Conclusion

Through this circular issued by SEBI, the process for transferring PMS by registered entities has been made relatively simpler, further evidencing India’s commitment to ease of doing business while maintaining significant strengthening of compliance and investor protection principles. We expect this will bring clarity, which should improve efficiencies and reduce complexity for registered portfolio managers to facilitate changes in their business affiliations in India’s fast-moving investment space.

[1] https://www.sebi.gov.in/legal/circulars/oct-2025/transfer-of-portfolios-of-clients-pms-business-by-portfolio-managers-_97443.html

[2] https://www.sebi.gov.in/legal/circulars/oct-2025/transfer-of-portfolios-of-clients-pms-business-by-portfolio-managers-_97443.html