SEBI eases mandatory investment norms for AMC employees

Nomination and Recruitment Committee or AMC will have to conduct a preliminary examination at its equivalent and according to the circular, SEBI will have to submit recommendations in case of violation. File | Photo Credit: Reuters

The Securities and Exchange Board of India (SEBI) has reduced the criteria related to the compensation parts that the fund managers of the asset management companies (AMCs) are made mandatory to invest in units that they manage to invest in units.

The regulator has prepared two ways to determine the minimum stake of salary to be invested in the schemes under his supervision by the manager (nominated employees) of the schemes. The first company will be based on the annual compensation set by the cost of the company (CTC) and the second by their designation. Earlier in June 2024, the Master Circular on Mutual Fund Regulations, this part was 20% flat of their annual compensation without any discount.

In the new system, employees earning less than ₹ 25 lakh should not be part of their salary to invest in their units. Alternatively, employees are also asked to invest in units based on their designation that they manage.

While the minimum investment has been reduced, its components have increased. In the rules of June 2024, dedicated fund managers had to invest half of their investment stake on the money managed by AMC. It has now been increased to 75%.

The market regulator said, “This will only apply to the designated employees associated with the Liquid Fund Scheme and also to the designated employees associated with other schemes other than the Liquid Fund Scheme, only in relation to the quantum to be invested in liquid fund schemes.”

A nominated employee who retires or retires from AMC can redeem his positions for open-ended schemes and after the end of a close finished scheme. Earlier, employees were not allowed to be released before the lock-in period until they reach the age of super-enhance. For the open and end of maturity for close-ended schemes, the lock-in period is also reduced.

In the case of violations, nomination and remuneration committee or AMC will conduct a preliminary examination at its equivalent and SEBI will have to submit recommendations as per the circular.

All schemes are mandatory to disclose the compulsory investment of compensation on units on a quarterly basis on stock exchange websites.