SEBI widens scope of key personnel at AMCs

Our Bureau Mumbai | Updated on March 04, 2021

Investment and redemptions by key personnel are monitored by SEBI, investors

SEBI has modified the term of ‘Key Managerial Personnel’ of asset management company to Key Personnel in order to widen the scope of scrutiny by covering more officials who are not in managerial position.

In a revised norms announced on Thursday, SEBI extended the Key Personnel list by including CEO, CIO, Chief Risk Officer, Chief Information Security Officer, Chief Operation Officer, Fund Managers, Compliance Officer, Sales Head, Investor Relation Officers, heads of other departments, dealers of the AMC and other persons as deemed fit and identified by AMC and Trustees.

Lesson from FT fiasco

The move comes close on the heels of allegations that key personnel in troubled Franklin Templeton had exited their investments in six of the debt schemes that were abruptly terminated in April last year.

Any investment and exit by key personnel should be reported to SEBI and unitholders separately. In proposals where unitholders voting is required, SEBI said an option should be given to unitholders to vote through post or any electronic mode.

AMCs should make disclosure of votes cast on their website on a quarterly basis, within 10 working days from the end of the quarter, it said.

Prior nod before selling biz

The market regulator has made it mandatory for mutual funds to seek the board and trustees prior approval besides informing the unit holders before selling of the business to the new entity.

No change in the control of the AMC can be made unless prior approval of the trustees and the Board is obtained. Written communication about the proposed change should to be sent to each unitholder and an advertisement should be given in one English daily.

On change in control, unitholders should be given an option to exit on the prevailing Net Asset Value without any exit load within 30 days from the date of communication.

In case the applicant proposing to take control of an AMC is not registered with SEBI it has to fresh application for approval.

As part of go green initiatives, SEBI has allowed AMCs to file the Monthly Cumulative Report and Annual Statics report in electronic form. The annual report containing accounts of the AMC should be displayed on the websites of the mutual funds immediately after getting approval in AGMs.

Published on March 04, 2021

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