Read on to find out what you need to do if you wish to transfer your assets to another ARN.
To bring uniformity in the practices followed by AMCs regarding transfer of AUM, AMFI has come out with fresh best practice guidelines. Here is what you should do if you wish to transfer full or partial assets to another ARN.
Under which circumstances can distributors request ARN code change?
Distributors can initiate ARN code change under the five following circumstances:
1) Change in the name / legal status - From individual to a partnership firm, A partnership firm converting itself into LLP, private limited company into a public limited company or vice versa.
2) Merger / acquisition / consolidation / transfer of business / new code acquired within the same group in case of non-individual distributors
3) Transfer of AUM / consolidation initiative within the same family / relatives in case of individual distributors
4) Transfer of business by individual distributors
5) Transfer of assets to the on-line platform of new distributor
Are distributors required to inform investors before transferring your assets to another ARN?
Yes, distributors need to inform their investors and obtain their consent before initiating transfer of assets to another ARN. If distributors do not receive any communication from investors within 15 days they can proceed with the transfer. Distributors have to send a letter with a copy of the intimation letter sent to investors informing AMCs about the transfer. AMCs will transfer the assets to new ARN after a cooling off period of 15 days from the date of the distributor’s letter.
What formalities have to be completed for initiating the ARN code change?
1) Distributors who wish to transfer their assets need to ensure that their ARN is valid. They should be KYD compliant and have furnished all self-certifications.
2) The transfer of assets has to be on full assets. After transferring assets to another ARN the distributor has to surrender his/her ARN card within 15 days after the completing the transfer. Also, distributors need to inform AMCs regarding the same.
3) Request for transfer of asset sent to AMCs by distributor shall also contain:
a. Reason for the transfer, supported by documentary evidence
b. A specimen copy of the letter of intimation sent to the investors; and
c. Certification that letters have been sent to all the investors (a list of investors should be attached along with proof of dispatch of letters)
Can distributors transfer partial assets to an online platform?
Yes, distributors can transfer partial or full assets to an online platform like Fundsindia or Ifast. In this case they don’t have to surrender their ARNs since they’ll continue to serve their clients.
When will the trail commission be released to the new distributor?
Payment of commission to the new distributor will be released only on cancellation of ARN of the old distributor.
What if investors object to the transfer of assets?
The distributor has to inform about the same to the concerned AMCs.
