One of our readers wrote to us about this problem.
I have been working with a national distributor as a sub broker. Since I have got a government job, I am planning to surrender my ARN. Through your articles, I came to know that transfer of AUM from national distributor to individual ARN is no longer allowed. But in my case, my father is also sub-broker with the same national distributor. I would like to understand if I could transfer my assets to my father’s ARN. Also, will he get trail commission on my assets after the transfer?
Abhishek Jain, Baroda, Gujarat
Dear Abhishek,
Distributors can initiate change in ARN if they change their name or legal status such as LLP, private limited and so on, merger or acquisition, transferring AUM within family and transferring entire business as a part of succession planning.
However, AMFI has done away with partial transfer of assets. Simply put, it is not possible to transfer the assets from your national distributor to new ARN.
Fortunately, both you and your father work as sub-brokers with the same entity. In this case, you can request your national distributor to map your AUM in your father’s ARN. A national distributor can do it internally without prior permission of AMFI. The national distributor will have to change ARN code and send a suitable communication to the investors confirming this.
You just need to surrender your ARN and exit the distribution business completely.
The new distributor i.e. your father would get trail commission only after transfer of valid assets (KYC compliant accounts). Also, such a commission is subject to claw back.
Note: We have written this article based on the inputs from operational heads of a few fund houses and R&T agents. This does not tantamount to be an advice of any nature or a recommendation. Please take advice from AMFI for your guidance.
