In a Circular dared 26th March, 2021 the Securities and Exchange Board of India (“SEBI”) has issued the following clarifications regarding transfer of business by SEBI registered intermediaries to other legal entity:
1. The transferee must obtain fresh registration from SEBI in the same capacity before the transfer of business if it is not registered with SEBI in the same capacity.
SEBI will issue new registration number to transferee different from transferor’s registration number in the scenario wherein business is transferred through regulatory process (pursuant to merger / amalgamation / corporate restructuring by way of order of primary regulator /govt / NCLT, etc) or non-regulatory process (as per private agreement /MOU pursuant to commercial dealing / private arrangement) irrespective of whether transferor continues to exist or ceases to exist after the said transfer.
2. In case of change in control pursuant to both regulatory process and non-regulatory process, prior approval and fresh registration has to be obtained. While granting fresh registration to same legal entity pursuant to change in control, same registration number will be retained.
3. If the transferor ceases to exist, its certificate of registration must be surrendered.
4. In case of complete transfer of business by transferor, it must surrender its certificate of registration.
5. In case of partial transfer of business by transferor, it can continue to hold certificate of registration.
Background:
SEBI has been receiving registration applications pursuant to transfer of business (SEBI regulated business activity) from one legal entity which is a SEBI registered Intermediary (transferor) to other legal entity (transferee).
In light of this, the present clarifications have been issued.
Source: Securities and Exchange Board of India
