SEBI made this proposal regarding investment rules for Mutual Fund employees – India TV Hindi

Market regulator SEBI has taken a special initiative for the nominated employees of mutual fund companies. SEBI on Thursday made some proposals to simplify the ‘relationship between risk and responsibility’ rule for employees. According to language news, these proposals relate to reducing the investment percentage required for employees of mutual fund (MF) companies, applying it on the basis of salary category and excluding components like ESOPs from the minimum investment calculation.

purpose of proposals

According to the news, the purpose of these proposals of the Securities and Exchange Board of India (SEBI) is to make compliance easier, especially for low-salaried employees and those working in operational roles. Currently, MF employees holding positions like chief executive officer (CEO), chief investment officer (CIO) and fund managers have to invest 20 per cent of their annual salary and allowances in the mutual funds they manage. This amount remains locked-in for three years.

Salary can be fixed according to category

SEBI in its consultation paper has said that the minimum mandatory investment amount can be reduced from 20 per cent and it can be implemented in a slab based on the total salary of the employees. The regulator suggested that there will be no mandatory investment for employees with income below Rs 25 lakh while 10 per cent for those with salary between Rs 25-50 lakh, 14 per cent for those with salary between Rs 50 lakh-Rs 1 crore and more than Rs 1 crore. Those who will invest 18 percent.

Also proposed to allow flexibility

SEBI has also proposed to relax mandatory investment conditions for non-investment employees like chief operating officers (COOs) and sales heads and allow flexibility depending on the role and activities of every employee within fund companies. Under current rules, the same percentage of investment is required for all designated employees of the company managing the mutual fund. SEBI has suggested excluding non-cash components like Employee Share Option Plan (ESOP) from the minimum investment calculation.

Also, SEBI has proposed to allow premature release of units in case of resignation of employees subject to restrictions. Under current rules, if employees leave the job before the retirement age, the units allotted to them get locked. In case of retirement, lock-in is removed except in closed-ended schemes.

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