SEBI Says Minimum 20% Of Key AMC Employee Compensation To Be Offered In Mutual Fund Units

In order to align the interest of the Key Employees of the Asset Management Companies (AMCs) with the unitholders of the mutual fund schemes, the SEBI stated that a part of compensation of the Key Employees of the AMCs shall be paid in the form of units of the scheme(s). A minimum of 20% of the salary/ perks/ bonus/ non-cash compensation (gross annual CTC) net of income tax and any statutory contributions (i.e. PF and NPS) of the Key Employees of the AMCs shall be paid in the form of units of Mutual Fund schemes in which they have a role/ oversight. The compensation paid in the form of units shall be proportionate to the AUM of the schemes in which the Key Employee has a role/oversight.

Further, with a view to allow the Key Employees to diversify their unit holdings, in case of dedicated fund managers managing only a single scheme / single category of schemes, 50% of the aforementioned compensation shall be by way of units of the scheme/category managed by the fund manager and the remaining 50% can, if they so desire, be by way of units of those schemes whose risk value as per the risk-o-meter is equivalent or higher than the scheme managed by the fund manager. No redemptions of the said units shall be allowed during the lock-in period. However, AMC may decide to have a provision of borrowing from the AMC by Key Employees against such units in exigencies such as medical emergencies or on humanitarian grounds, as per the policy laid down by the AMC.

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