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Published on 7 April 2025

SEBI Introduces Single-Window Clearance for Market Entities' Control Changes

Introduction

The Securities and Exchange Board of India (SEBI) has approved a single-window clearance system for market entities, including stock brokers, merchant bankers, and credit rating agencies, to facilitate the prior approval process for changes in management control.

Revised Procedure for Seeking Prior Approval

To:

  • All Recognized Stock Exchanges
  • All Registered Depositories
  • All Registered Merchant Bankers
  • All Registered Debenture Trustees
  • All Registered Underwriters
  • All Registered Bankers to an Issue
  • All Registered Credit Rating Agencies
  • All Registered Registrars to an Issue and Share Transfer Agents

Dear Sir/Madam,

Subject: Streamlined Procedure for Change in Control Approval

  1. SEBI previously detailed a procedure for stock brokers to seek prior approval for changes in status and constitution in Circular No. MIRSD/MSS/Cir-30/13289/03, dated July 9, 2003.

  2. Recent amendments to regulations concerning various intermediaries—including Stock Brokers, Sub-brokers, Merchant Bankers, Debenture Trustees, Registrars to an Issue, Underwriters, Depository Participants, Bankers to an Issue, and Credit Rating Agencies—were announced in Notification No. LAD-NRO/GN/2011-12/03/12650, dated April 19, 2011. These amendments exempt certain changes in status or constitution from requiring prior approval, except for any change in control involving the aforementioned intermediaries, which still necessitates SEBI's prior approval.

  3. To expedite the approval process, a ‘single-window clearance’ system will be implemented for intermediaries with multiple registrations with SEBI. The newly established procedure consists of:

    (i) Application Submission:

    • Applicants with multiple SEBI registrations must submit a single application that includes:
      • Confirmation whether a previous registration application was denied by SEBI, including details.
      • Information about any actions taken under the SCRA/SEBI Act or related regulations, along with status updates and details of corrective actions.
      • Confirmation that the acquirer will address any pending investor complaints and that due fees to SEBI have been settled.
      • Information regarding ongoing litigations, if any.
      • Assurance that the existing Board of Directors will remain unchanged until prior approval is granted.
      • Notification to all investors/clients about the change in management to allow informed decisions.

    (ii) Additional Requirements for Registered Stock Brokers/Depository Participants:

    • If the incumbent is a registered stock broker or depository participant, they must also obtain NOC approval from all respective Stock Exchanges/Depositories, submitting a self-attested copy to SEBI.

    (iii) Application Address:

    • Applications should be addressed to the “Chief General Manager, MIRSD, SEBI”.

    (iv) Approval Validity:

    • Any prior approval granted by SEBI is valid for 180 days from the date of communication.

  4. Compliance is critical:

    • Intermediaries must adhere to the provisions of this circular.
    • Stock exchanges and depositories should:
      • Inform Stock Brokers and Depository Participants about this circular and publish it on their websites.
      • Amend relevant by-laws, rules, and regulations as needed for uniform implementation.
      • Report the status of implementation in their Monthly Development Reports to SEBI.

  5. This circular is issued under the authority of section 11(1) of the Securities and Exchange Board of India Act, 1992, to ensure investor protection and to promote the regulation and development of securities markets.

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