highlights
On December 27, the Securities and Exchange Board of India (SEBI) issued regulations regarding transfer of shareholdings and transfers of shareholdings between close relatives of Investment Advisors (IAs), Research Analysts (RAs) and KYC (Know Your Customer). An explanation has been published. Registration Authority (KRA).
Stock transfer/assignment in the case of non-listed company corporate intermediary
The market regulator has clarified that a change in the shareholding of an intermediary by transfer of shareholding between close relatives or transfer of shareholding by transfer to a close relative does not result in a change of control.
“This is a clarification that the transfer of shares within close family members, such as spouses and children, does not constitute a change of control and is in line with the basic tenets of the law, making it easier to continue business operations in such cases. ” said Managing Director Jyoti Prakash Gadia. Director of Resurgent India said:
Stock transfer/assignment in case of in-house brokerage
The market regulator has clarified that a transfer or bequest of business/capital to another is considered a change of control, as legal formation or change of ownership falls within the scope of change of control. did.
“Change of control is determined by the constitutional nature of the individual entity. Considering the legal position under existing laws such as contract law, partnership law etc. “Each case needs to be treated more clearly to determine whether there is a change of control,” Jyoti Prakash Gadia stressed.
Transfer/assignment of ownership in case of partnership type brokerage
Market regulators prescribe the methods to be applied for assignments and transfers of ownership in the case of partnership firms, depending on the changes in the partners of partnership firm-type intermediaries and their ownership.
In case of transfer of ownership of a partnership firm where the SEBI registered entity is registered as a partnership firm with three or more partners, internal transfer between the partners shall not be construed as a change of control.
A partnership consisting of only two partners shall be dissolved upon the death of one of the partners.
However, if a new partner joins the company, it will be considered a change of control and will require fresh registration and prior SEBI approval.
In the case of a transfer of ownership of a partnership firm, if the partnership deed contains a clause recognizing a deceased partner’s legal heir in the event of his death, that legal heir may be: Masu. Partner in a partnership firm.
This will lead to the restructuring of the partnership company. However, the bequest of a partnership interest to a legal heir by conveyance is not considered a change of control.
The market regulator has provided provisions in Schedule II of the SEBI (Intermediaries) Regulations, 2008 for new entities/shareholders who become part of the controlling interest of an intermediary on the basis of transfer/transfer of shares from close relatives. Mandating requirements standards for qualified and suitable persons. Number of shares (direct relatives or not). Jyoti Prakash Ghadia said, “SEBI has adopted the basic criteria of “fit and suitable persons” already laid down in previous regulations for those entering the country, whether they are close relatives or not.” “We have continued with important regulatory aspects,” he added.
This represents a pragmatic approach on the part of SEBI while facilitating continuity of operations in accordance with key legal positions regarding ownership structure for determining change of control. Jyoti Prakash Gadia, Managing Director, Resurgent India
This provision shall have prospective effect from the date of publication of the circular.
