Sebi Clarifies Rules for Share Transfers and Stake Inheritance

Sebi has clarified regulations for the transfer and transmission of shares among immediate relatives for investment advisers, research analysts, and KYC registration agencies. The rules ensure transparency and prevent changes in control if shares are transferred among close family members, while requiring approval for new controlling interests.

On Friday, the Securities and Exchange Board of India (Sebi) provided clarification on the transfer and transmission of shareholding among immediate relatives for investment advisers, research analysts, and KYC registration agencies, aiming to enhance transparency and protect investors.

Sebi stated that transferring shares among immediate relatives, such as spouses and children, does not constitute a 'change in control.' Likewise, the transmission of shares does not affect control for unlisted body corporate intermediaries, though proprietary firms must seek fresh registration if ownership changes legally.

In partnerships with over two partners, ownership transfers will not change control, and legal heirs can inherit shares per the partnership deed. New partner induction requires Sebi's approval, and controlling interests must align with the 'fit and proper person' standards. These provisions are now effective.