Two separate Sebi panels to review ownership norms of MFs, trustees

Market regulator has said an alternative set of eligibility rules can be introduced to enable new players who otherwise aren't eligible to act as sponsors

The Securities and Exchange Board of India (Sebi) has set up two separate expert groups to examine the roles, eligibility criteria and functions of sponsors and trustees at asset management companies (AMCs)

A sponsor is like a promoter who brings in the capital for setting up an AMC, while a trustee plays a supervisory role and is tasked with protecting investors interest.

In a release, Sebi has said an alternative set of eligibility requirements can be introduced to enable new players who otherwise aren’t eligible to act as a sponsor.

“This is expected to not only foster competition in the mutual fund industry but also facilitate consolidation in the industry through mergers and acquisitions so as to reap economies of scale and scope. This is also expected to facilitate fresh flow of capital into the industry and to foster innovation,” the regulator said.

The working group on sponsors will be chaired by Balasubramanian, MD & CEO, Aditya Birla Sun Life AMC.

Sebi has hinted that it is looking at allowing private equity (PE) players to set up AMCs.

It has said the terms of reference for the working group is “to recommend mechanisms for addressing conflict of interest that may arise if pooled investment vehicles/ private equity act as sponsor; and to examine the need for sponsor to dilute its stake in asset management company from the existing requirement of holding at least 40 per cent of the net worth and the alternative pathways that may be adopted by the sponsors in this regard.”

Meanwhile, the working group on MF trustees will be chaired by Manoj Vaish, Independent Trustee, Mirae MF.

The terms of reference for this group include “determining whether certain obligations of operational nature can be delegated to AMC; to identify those responsibilities for which trustees can avail the services of professional assurance agencies; and to recommend required financial resources to be made available to trustees to independently discharge their obligations.”

In the past, experts have called to review the organisation structure of an AMC and the need to rethink responsibilities of an AMC, its sponsor and trustees.