SEBI Guidelines for Business Transfer among Registered Intermediaries

Introduction

This circular issued by the Securities and Exchange Board of India (SEBI) addresses the transfer of business among SEBI-registered intermediaries to other legal entities. It clarifies the registration requirements and procedures involved in such transactions.

Transfer of Business Guidelines

SEBI has received numerous applications for registration concerning the transfer of business from one SEBI-registered intermediary (the transferor) to another legal entity (the transferee). The following guidelines are provided for clarity:

New Registration Requirement:
- The transferee must obtain a fresh registration from SEBI in the same capacity prior to the transfer if it does not already hold such registration.
- A new registration number will be issued to the transferee that is distinct from the transferor’s registration number in either of the scenarios below:
  - Regulatory processes, such as mergers, amalgamations, or corporate restructurings mandated by a regulatory authority, government, or National Company Law Tribunal (NCLT).
  - Non-regulatory processes, such as transactions conducted under a private agreement or Memorandum of Understanding (MOU) through commercial dealings, regardless of whether the transferor continues to operate or is dissolved post-transfer.
Change in Control:
- For any change in control initiated through either regulatory or non-regulatory means, prior approval and fresh registration must be sought.
- If the same legal entity is granted fresh registration due to a change in control, it may retain the same registration number.
Transferor’s Certificate of Registration:
- If the transferor entity ceases to exist, it is obligated to surrender its certificate of registration.
- In the event of a complete business transfer, the transferor must also surrender its certificate.
- Should there be a partial transfer of business, the transferor is permitted to retain its certificate of registration.

Regulatory Authority

This circular is issued under the authority of Section 11(1) of the Securities and Exchange Board of India Act, 1992, aimed at safeguarding investor interests in securities and fostering the regulation and development of the securities market.