**Summary:**
This circular, reference number SEBI/HOM/IRSDD/CIR/P/2021/46, issued by the Securities and Exchange Board of India (SEBI) on March 26, 2021, addresses the transfer of business by SEBI-registered intermediaries to other legal entities. It clarifies the registration requirements for the transferee entity in such scenarios.
Specifically, the circular states that the transferee must obtain fresh registration from SEBI before the transfer of business if it is not already registered with SEBI in the same capacity. A new registration number, different from the transferor's, will be issued to the transferee when the business is transferred through either a regulatory process (e.g., merger, amalgamation, corporate restructuring via regulatory/government/NCLT order) or a non-regulatory process (e.g., private agreement, MOU). This applies regardless of whether the transferor continues to exist after the transfer.
In cases of change in control, whether regulatory or non-regulatory, prior approval and fresh registration are required. However, the same registration number will be retained for the same legal entity undergoing a change in control.
The circular also outlines procedures for the transferor: If the transferor ceases to exist, its registration certificate must be surrendered. In a complete transfer of business, the transferor must surrender its registration certificate. If only a partial transfer occurs, the transferor may continue to hold its registration certificate.
This circular is issued under Section 11(1) of the Securities and Exchange Board of India Act, 1992, aimed at protecting investor interests, promoting market development, and regulating the securities market.
For further information, contact Anupma Chadha, Dy. General Manager, at Phone: 022-26449319 or Email: anupmac@sebi.gov.in. The circular is addressed to all Stock Brokers (through exchanges), Depository Participants (through Depositories), Merchant Bankers, Registrar to an Issue and Share Transfer Agents, Debenture Trustees, Credit Rating Agencies, and Bankers to an issue.
Key Entities Referenced
Securities and Exchange Board of India (SEBI): The regulatory body for securities markets in India, responsible for registering and overseeing intermediaries.
Stock Brokers: Entities that trade stocks on behalf of clients.
Depository Participants: Agents of depositories that provide services to investors.
Merchant Bankers: Financial institutions that underwrite and manage the issuance of securities.
Registrar to an Issue and Share Transfer Agent: An entity that manages the records of shareholders and facilitates the transfer of shares.
Debenture Trustee: An entity that protects the interests of debenture holders.
Credit Rating Agencies: Agencies that assign credit ratings to companies and debt instruments.
Bankers to an issue: Banks that are involved in the process of issuing securities to the public.
CIRCULAR
SEBI/HO/MIRSD/DOR/CIR/P/2021/46 March 26, 2021
All Stock Brokers through exchanges
All Depository Participants through Depositories
All Merchant Bankers
All Registrar to an Issue and Share Transfer Agent
All Debenture Trustee
All Credit Rating Agencies
All Bankers to an issue
Dear Sir / Madam,
Sub: Transfer of business by SEBI registered intermediaries to other legal entity
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 this regard, following is
clarified:
1. The transferee shall 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 shall issue new registration number to transferee different from
transferor’s registration number in the following scenario:
“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 transferor continues to exist or ceases to exist after the said
transfer.
Page 1 of 22. In case of change in control pursuant to both regulatory process and non-
regulatory process, prior approval and fresh registration shall be obtained. While
granting fresh registration to same legal entity pursuant to change in control,
same registration number shall be retained.
3. If the transferor ceases to exist, its certificate of registration shall be surrendered.
4. In case of complete transfer of business by transferor, it shall surrender its
certificate of registration.
5. In case of partial transfer of business by transferor, it can continue to hold
certificate of registration.
This circular is issued in exercise of powers conferred under Section 11 (1) of the
Securities and Exchange Board of India Act, 1992, to protect the interests of investors in
securities and to promote the development of, and to regulate the securities market.
Yours faithfully
Anupma Chadha
Dy. General Manager
Phone:022-26449319
Email: anupmac@sebi.gov.in
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