The Securities and Exchange Board of India (SEBI) has issued a new circular (SEBI/HO/IMD/RAC/CIR/P/2025/0000000138) on October 24, 2025, introducing a significant reform for the Portfolio Management Services (PMS) industry. This circular allows transfer of PMS business between portfolio managers, streamlining regulatory processes and aligning with SEBI’s ongoing initiative to promote Ease of Doing Business (EoDB) in the securities market.
A Step Towards Simplification and Operational Efficiency
Until now, transferring a PMS business from one portfolio manager to another involved complex approvals and operational hurdles. The new circular simplifies this process by defining clear procedures for such transfers—both within the same business group and between unrelated entities—while ensuring that investor interests remain fully protected.
Under this new framework, SEBI has allowed portfolio managers to transfer their PMS business—either partially (select investment approaches) or completely—subject to prior SEBI approval and compliance with prescribed conditions.
Transfer Within the Same Group: Flexibility with Safeguards
For portfolio managers belonging to the same group, SEBI has provided much-needed flexibility. They can now transfer either:
- Select Investment Approaches, or
- The entire PMS business
The conditions are straightforward:
- If the entire PMS business is transferred, the transferor (the existing portfolio manager) must surrender its PMS registration certificate within 45 working days from the date of completion of the transfer.
- If only specific investment approaches are transferred, the transferor can retain its registration certificate and continue managing other client portfolios.
This approach allows business groups to restructure their PMS offerings, consolidate operations, or manage strategic transitions without disrupting client services.
Transfer Between Unrelated Portfolio Managers: A Defined Two-Month Process
When a transfer occurs between two unrelated portfolio managers, SEBI requires a joint application from both the transferor and the transferee to obtain approval. However, SEBI has ensured that such transfers follow a clear, time-bound, and transparent process:
- Only a complete transfer of PMS business is allowed; partial transfers (of select investment approaches) are not permitted.
- The transferee must meet all regulatory requirements and will assume all responsibilities, including pending litigations or obligations of the transferor, after the transfer. An undertaking to this effect must be submitted (Annexure I).
- The entire transfer must be completed within two months of SEBI’s approval.
- Until the transfer is finalized, the transferor must continue managing existing clients but cannot onboard new clients.
- After completion, the transferor must surrender its registration certificate following SEBI’s surrender procedure, supported by a formal undertaking (Annexure II).
This clarity not only reduces regulatory uncertainty but also facilitates smoother business continuity for clients.
Effective Immediately: Strengthening the PMS Ecosystem
The provisions of this circular come into effect immediately. By issuing this circular under the powers granted by Section 11(1) of the SEBI Act, 1992, and Regulation 43 of the SEBI (Portfolio Managers) Regulations, 2020, SEBI reinforces its dual mandate—to protect investor interests and to promote the orderly development of the securities market.
Conclusion
SEBI’s circular on the transfer of PMS business marks a significant milestone in modernizing India’s portfolio management landscape. It strikes the right balance between regulatory oversight and operational flexibility, enabling portfolio managers to restructure their businesses efficiently while ensuring investor protection.
By simplifying compliance, introducing standardized procedures, and offering well-defined timelines, SEBI has reaffirmed its commitment to Ease of Doing Business in the capital markets—empowering portfolio managers to innovate, collaborate, and serve investors more effectively in an evolving financial ecosystem.