SEBI, by way of a Circular dated May 12, 2021 (‘Initial Circular’), specified the procedure for obtaining prior approval in case of change in control of a portfolio manager (‘PM’). SEBI has now by way of a Circular dated June 02, 2022 (‘June 02 Circular’), streamlined the process for seeking its prior approval for the proposed change in control of a PM thereby modifying and superseding the provisions of the Initial Circular with effect from June 15, 2022. Key changes, introduced by the June 02 Circular include:

i.     Introduction of an online application be made by the PM through the SEBI intermediary portal;

ii.    The prior approval granted by SEBI will be valid for a period of six months. Applications for seeking fresh registration pursuant to the change of control will have to be made within six months from the date of prior approval;

iii.   The PM must, pursuant to the grant of prior approval, inform the existing clients and investors of the proposed change prior to effecting the same and provide them an exit option without any exit load, within 30 days from the date of the communication; and

iv.    In matters involving schemes of arrangement requiring the sanction of National Company Law Tribunal (‘NCLT’), the application seeking SEBI’s prior approval is required to be filed with SEBI prior to filing the application with NCLT. In-principle approval once granted by SEBI will be valid for three months, within which the relevant application will have to be made to the NCLT. Further, within 15 days from the date of the NCLT order, the PM will be required to submit an online application along with the prescribed documents to SEBI for its final approval.