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TMI BlogFacilitating ease of doing business relating to the framework on “Alignment of interest of the Designated Employees of the Asset Management Company (AMC) with the interest of the unitholders”X X X X Extracts X X X X X X X X Extracts X X X X ..... he unitholders" 1. With an objective to facilitate ease of doing business for Mutual Funds, amendments to SEBI (Mutual Funds) Regulations, 1996 ('MF Regulations') were carried out to relax the regulatory framework relating to 'Alignment of interest of the Designated Employees of the AMCs with the interest of the unitholders' (hereinafter referred to as 'skin in the game requirements'). The amendments have been notified vide notification dated February 14, 2025 (link to the Gazette notification) and March 04, 2025 (link to the Gazette notification). The said amendments shall be applicable from April 01, 2025. 2. Accordingly, in terms of Regulation 25 (16B) of MF Regulations, the Master Circular for Mutual Funds dated June 27, 2024 ('Master ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibutions 22.5% of gross annual CTC net of income tax, any statutory contributions and ESOPs. AMC shall have the option to adopt Option A or Option B for its Designated Employees. Designated Employee with no ESOP component as part of their CTC shall be covered under Option A. b) The slabs applicable to a Designated Employee at point (a) above shall also be decided based on the role of the Designated Employee in the AMC in the following manner: Category Employees Slab applicable Category A * Chief Executive Officer (CEO) * Chief Investment Officer (CIO) * Fund Managers * Investment Research team * Dealers * Chief Risk Officer (CRO) * ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in schemes, managed by the AMC, with higher risk as compared to liquid fund schemes. This shall be applicable for Designated Employees associated with only liquid fund scheme and also for Designated Employees associated with other schemes in addition to liquid fund scheme, only with respect to the quantum required to be invested in liquid fund schemes. For this purpose the risk value based on the risk-o-meter of the immediate preceding month shall be considered." C Clause 6.10.2.2. modified as: "In case of retirement on attaining the superannuation age as defined in the AMC service rules, the units shall be released from the lock-in and the Designated Employee shall be free to redeem the units, except for the units in close ended sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Master Circular, Clause 6.10.7.2 shall be inserted as: "In the event of violation of Code of Conduct under the MF Regulations, fraud, gross negligence by Designated Employees, the Nomination and Remuneration Committee of AMC shall undertake the preliminary examination and provide recommendations to SEBI for consideration, after approval of the Trustees. For AMCs where the Nomination and Remuneration Committee has not been constituted, an equivalent body under the Board of AMC shall undertake the preliminary examination and provide recommendations to SEBI for consideration, after approval of the Trustees." H Clause 6.10.8.3. modified as: "Every scheme shall disclose the 'compensation, in aggregate, mandatorily invested in units for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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