The capital markets regulator recently redrafted rules for seeking prior approval for change in control of portfolio managers. The new rules, states the circular, have been drafted to streamline the process of giving approval to the proposed change in control of portfolio manager.
The circular says that an online application needs to be made by portfolio manager to SEBI for prior approval through the intermediary portal: https://siportal.sebi.gov.in/intermediary/index.html.
The prior approval will be valid for a period of six months.
Intimation to investors
Another important development relating to investors is this: In order to enable existing investors/ clients to take well informed decision, the portfolio manager is now supposed to intimate its existing investors/ clients about the proposed change.
This intimation must be made before the change comes into effect and the investors are meant to be given an option to exit without any exit load within 30 days, the SEBI circular implies.
To come into effect from June 15
These rules will come into effect from June 15 to all applications for approval of applications of change in control of portfolio manager.
At the same time, schemes which need sanction of the National Company Law Tribunal (NCLT), the portfolio manager will ensure that the application will be filed with the capital markets regulator prior to filing the application with NCLT.
Continuation of old rules
It is worth mentioning here that this circular is in continuation of a similar circular issued on May 12, 2021 that had mandated portfolio managers to seek prior approval of SEBI in case of change of portfolio managers.
The previous circular also stipulated that the investors be informed of this change so that they can decide of either continuance or otherwise as a result of the changed management.
However, the new circular now supersedes the old circular, and the new regulations differ from the previous circular to the effect that the investors will now have the option to exit the scheme within 30 days without any exit load.