Q.26: If a non-individual Investment Adviser (private limited company) is sold to a prospective employer is it mandatory

(a)  to obtain prior SEBI approval for BUYER and

(b)  is there a requirement for the current Principal Officer to continue in his position although he is not a part of the new management.

Response to Sub-Query-1

Yes, Prior approval from SEBI is to be taken.

Regulation 15(11) clearly states that “In case of change in control of the investment adviser, prior approval from the Board shall be taken.”

Response to Sub-Query-2

No, there is no legal requirement for current Principal Officer to continue.

But, it may be considered practically, whether such person is needed to be continued, because, before SEBI approves the ‘change in control’ it would assess the Proposed Principal Officer’s compliance with the certification, qualification and experience requirements under regulation 7. If you don’t have such person readily, then better to continue with same Principal Officer.

Further note – Such declaration has to be provided by the Company, that its principal officer and persons associated with investment advice currently comply with the certification, qualification and experience requirements under regulation 7.