SEBI New Guidelines! Change of Management: Share transfer among close relatives will not be considered as ownership change or change in management controlling authority. SEBI has also clarified the definition of close relative.
SEBI New Guideline! Share market regulator SEBI has issued a guideline and clarified the nature of ownership change of listed companies. Under this, share transfer among close relatives will not be considered as ownership change or change in management controlling authority. SEBI has also clarified the definition of close relative. Under this, only wife, parents, siblings and children will be considered close relatives. There is no need to inform SEBI separately as transferring inheritance or shares to them is not management change or ownership transfer.
Why did SEBI need a separate guideline for clarification?
SEBI had issued a guideline related to transfer of shares to mediation or middleman firms. There was confusion about this. It was believed whether transferring shares to relatives would also be considered as change in the nature of management control. SEBI has clarified that apart from wife, parents, siblings and children, no one will be considered a close relative. At the same time, it will be mandatory to inform SEBI about the transfer of shares to investment advisors, research analysts or companies providing services related to them. These will be considered in the category of mediation or middleman firms. SEBI has felt the need to clarify the whole matter by issuing guidelines to protect the interests of investors.
Son taking over the management after the death of father will not be a management change
On the basis of SEBI’s new guidelines, experts believe that in this way the legal form of the relationship of investment advisor and research analyst firms with the company has been decided. It is also clear from this that after the death of the father, the son taking over the management or any close relative taking over the management will not be considered an ownership change. This will be applicable to all types of firms, proprietary, partnership and corporate.
