The Securities and Exchange Board of India vide its notification dated 25th March 2021 has issued clarification on change in control criteria for market intermediaries and requirement for seeking its prior approval.
Transfer of shareholding by way of transmission to immediate relative or not, shall not result into change in control and in case of an intermediary being a proprietary concern, the transfer or bequeathing of the business/capital by way of transmission to another person is a change in the legal formation or ownership and is hence a change in control.
For transfer of ownership interest in case of partnership firm with more than two partners, inter-se transfer amongst the partners would not be construed to be change in control.
Further incoming entities or shareholders becoming part of controlling interest in the intermediary pursuant to transfer of shares from immediate relative or transmission of shares, whether immediate relative or not, need to satisfy the fit and proper person criteria stipulated in Schedule II of SEBI (Intermediaries) Regulations, 2008.
