Capital markets regulator Sebi has amended rules which require vault managers and custodians to seek the watchdog’s prior approval in case of change in control. The changes have been made to streamline the process of providing approval to the proposed change in control of the entities.

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In a notification, the Securities and Exchange Board of India (Sebi) said that the vault managers and Custodians will have to obtain prior approval of the Board in case of change in control in such a manner as specified by the regulator.

To give this effect, Sebi has amended rules governing custodian and vault managers and the new rule has become effective from January 17.

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Vault manager is regulated as a Sebi intermediary for providing vaulting services meant for gold deposited to create electronic gold receipts (EGRs). The obligations of the vault manager include accepting deposits, storage and safekeeping of gold, creation as well as withdrawal of EGR, grievance redressal and periodic reconciliation of physical gold with the records of depository.

Custodian means any person who carries on the business of providing custodial services.

In November 2022, the markets regulator had put in place a revised framework for seeking its prior approval for changes in control of stock brokers, depository participants and other market intermediaries.

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The framework was applicable for stock broker/clearing member, depository participant, investment adviser, research analyst or research entity, registrar to an issue and share transfer agent and KYC (Know Your Client) Registration Agencies (KRAs).

Under this, an intermediary is required to apply online for Sebi’s prior approval and along with the application, the entity concerned has to submit various details, including the current and proposed shareholding pattern of the applicant.

The prior approval granted by Sebi is valid for a period of six months from the date of such approval within which the applicant needs to file application for fresh registration pursuant to change in control.

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