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Sebi caps cross-holding in MFs at 10%

The new measure may have an impact on the shareholding pattern of UTI Asset Management Company

Press Trust of India  |  Mumbai 

Photo: Reuters

To avoid any potential conflict of interest, regulator Sebi on Thursday decided to put a 10 per cent cross-shareholding cap in

The new measure may have an impact on the shareholding pattern of (AMC), requiring its promoters to lower their stake to 10 per cent or below in next one year.

of (SBI), National (PNB), of Baroda (BoB) and Corporation (LIC) are having their own and at the same time, they hold 18.24 per cent stake each in

The board of Securities and Exchange Board of (Sebi) has decided that any shareholder owning at least 10 per cent stake in an AMC will not be allowed to have 10 per cent or more stake in another house operating in the country, Sebi Tyagi told reporters here.

Further, a sponsor of a mutual fund, its associates, group company and its asset management company will be restricted from holding 10 per cent or more stake in a rival AMC.

In addition, such entities will be barred from having a representation on the board of another house.

The moves are aimed at avoiding any and help in strengthening the governance structure for

In addition, Sebi has decided to come out with a fresh consultation paper on in order to segregate advisory and the role of a distributor, Tyagi said.

However, distributors while distributing the can explain the features of the product to a client.

To prevent the that exists between 'advising' of and 'selling' of by the same entity/person, there should be clear segregation between these two activities, the regulator said.

Existing registered investment advisers who are offering distribution services through a separate division would be given an option to choose between providing investment advice and distribution service before March 31, 2019.

From April 1, 2019, any person, including their immediate relatives or holding or subsidiary or associate entity shall offer either investment advice or distribution services.

Sebi had first issued a discussion paper that outlined the road map of distribution and advice in October 2016 and a revised consultation paper was issued in June.

Further, the regulator will provide an additional method --qualified institutional placement (QIP) -- route for listed entities to achieve the minimum public shareholding requirements.

First Published: Thu, December 28 2017. 17:06 IST