SEBI revised prior approval for change in control of Portfolio Managers

In order to protect the interests of investors insecurities market and to promote the development of, and to regulate the securities market, Securities and Exchange Board of India (SEBI) vide Circular No. SEBI/HO/IMD-I/DOF1/P/CIR/2022/77 dated 02^nd June, 2022 has issued notification related to "Procedure for seeking prior approval for change in control of Portfolio Managers" in exercise of the powers conferred under Section 11(1) of theSecurities and Exchange Board of India Act, 1992 read with Regulation 43 of the SEBI (Portfolio Managers) Regulations, 2020.

Applicability

• applicable with effect from June 15, 2022
• applicable to all applications for approval of applications of change in control of Portfolio Manager
• Circular No. SEBI/HO/IMD/IMD-I/DOF1/P/CIR/2021/564 dated May 12, 2021 shall stand superseded with effect from the date of applicability of this Circular.

Key Highlights

1. Sebihas streamlined the process of providing its approval to the proposed change in control of a portfolio manager.
2. SEBI has specified the procedure that needs to be followed by portfolio managers in matters which involve scheme(s) of arrangement which needs sanction of the National Company Law Tribunal (NCLT).
3. An online application shall be made by Portfolio Manager to SEBI for prior approval through the SEBI Intermediary Portal (https://siportal.sebi.gov.in).
4. The prior approval granted by SEBI shall be valid for a period of six months from the date of such approval.
5. Applications for fresh registration pursuant to change in control shall be made to SEBI within six months from the date of prior approval.
6. Pursuant to grant of prior approval by Sebi, in order to enable existing investors to take well-informed decision regarding their continuance or otherwise with the changed management, the portfolio manager is required to inform its existing investors about the proposed change prior to effecting the same and give an option to exit without any exit load, within a period of at least 30 calendar days from the date of such communication.
7. Within 15 days from the date of order of NCLT, Portfolio Manager shall submit an online application in terms of paragraph 2(i) of this Circular along with the following documents to SEBI for final approval:

• Copy of the NCLT Order approving the scheme;
• Copy of the approved scheme;
• Statement explaining modifications, if any, in the approved scheme vis-à-vis the draft scheme and the reasons for the same; and
• Details of compliance with the conditions/ observations mentioned in the in-principle approval provided by SEBI.