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TMI BlogInvestment/Trading in Securities by Employees of Asset Management Companies and Mutual Fund Trustee CompaniesX X X X Extracts X X X X X X X X Extracts X X X X ..... ocedures and code of conduct for such transactions so that there is no conflict of interest between the transactions of employees and the mutual fund and interests of unitholders are not affected adversely. Association of Mutual Funds in India (AMFI) and the SEBI Advisory Committee on Mutual Funds made certain recommendations on investment/trading in securities by employees of Asset Management Companies and Mutual Fund Trustee Companies. After examining these recommendations, it has been decided that all mutual funds should take steps to implement the guidelines as enclosed herewith. These guidelines specify the minimum requirements that have to be followed. The asset management companies and mutual fund trustee companies have the option to set more stringent norms for investment/trading in securities by their employees. These guidelines are being issued in accordance with the provisions of Regulation 77 of the SEBI (Mutual Funds) Regulations, 1996. All mutual funds shall report Implementation of the guidelines to SEBI by May 22, 2001. Further, the boards of AMCs and trustee companies shall ensure the compliance of the guidelines on a continuous basis and shall re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (including public provident fund) or investment in savings schemes such as National Savings Certificates, National Savings Schemes, Kisan Vikas Patra, or any other similar investment. ii. investments of a non-financial nature such as gold, real estate etc, where there is no likely conflict between the Mutual Fund s interest and the employees interest. iii. investments in government securities, money market instruments and money market mutual fund schemes. 1.2. Type of Holdings : These Guidelines cover transactions for sale or purchase of securities made in the employees name, either individually or jointly, and in the name of the employees spouse and/or dependent children and transactions as a member of HUF. Further, no employee shall pass on information to anybody inducing him to buy/sell securities which are being bought/sold by the Mutual Fund of which the AMC is the investment manager. Investments in securities shall broadly be classified into investments through (a) primary markets and (b) secondary markets. 1.3. Prior approval of personal investment transactions: All access persons except Complian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.2. Notwithstanding what is stated in 2.1.1. above, an employee of an AMC/TC may apply for shares / debentures / bonds / warrants in a preferential offer, in cases where such a preferential offer is being made by a company that belongs to the same industrial group as that of one in which the employee already has an investment, provided that such a preferential offer is made to all shareholders/debentureholders of such companies. Details of such applications made should be intimated to the Compliance Officer. 2.1.3. The employees of the AMCs/TCs including access person may apply for any rights offer of any company in which they are already shareholders. Applications for additional rights (over and above the normal rights entitlement) shares may be made by the employees including access person without getting the clearance from the Compliance Officer. An employee including access person may also sell/renounce his rights entitlement without getting the clearance from the Compliance Officer. However, if an access person wishes to purchase the rights renunciations , he should get the clearance of the Compliance Officer for doing the same. Such purchases of rights renunciation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of any security (including derivatives). 5. Employees who effect any purchase transactions shall ensure that they take delivery of the securities purchased, before selling them. 6. Any transaction of front running by any employee directly or indirectly is strictly prohibited. For this purpose, front running means any transaction of purchase /sale of a security carried by any employee whether for self or for any other person, knowing fully well that the AMC also intends to purchase/sell the same security for its mutual fund operations. For the purpose of ascertaining that the employee had no prior knowledge of the Mutual Fund's intended transactions, the Compliance Officer may take a declaration in this regard from the employee. Such declaration may be included in the application form itself. 7. Any transaction of self-dealing by any employee either directly or indirectly, whether alone or in concert with another person is prohibited. For this purpose, self dealing means trading in the securities based on information which is price sensitive in nature and to which he has access by virtue of his office. Declaration to this effect may be taken fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts through the secondary market within 7 calendar days from the date of transaction; b. details of allotment received against application for public and rights issues within 7 calendar days from the date of receipt of the allotment advice; c. a statement of holding in securities as on March 31 within 30 calendar days from the end of every financial year ending March 31. All employees other than access persons shall submit in the form prescribed by the Mutual Fund, to the Compliance Officer: a. The details of each of their transactions for purchase or sale of securities including allotment in public and rights issues within 7 calendar days. b. a statement of holding in securities as on March 31 within 30 calendar days from the end of every financial year ending March 31. A declaration may also be included in the reporting form on the lines of clause 2.2.6 and 2.2.7 above regarding front running and self-dealings. REVIEW BY THE BOARD OF DIRECTORS 5.0. The boards of AMCs and Trustee Companies shall review the compliance of the guidelines in their periodical meetings. They may review the existing procedures and r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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