AMC key employees ALERT: SEBI extends implementation date for circular on compensation from July 1 till THIS date

Markets regulator Sebi on Friday extended the implementation date for a circular pertaining to the compensation of asset management companies'' (AMCs) key employees, till October 1, 2021. 

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Initially, when the regulator came out with the circular in April, in order to align the interest of the key employees of asset management companies (AMCs) with the unitholders of the mutual fund schemes, the framework was to come into effect from July 1, 2021.  

"However, based on the feedback received from stakeholders, it has been decided to extend the date of implementation of the circular to October 1, 2021," Sebi said in a circular on Friday.  

Key employees of the AMCs include: chief executive officer (CEO), chief investment officer (CIO), chief risk officer (CRO), chief information security officer (CISO), chief operation officer (COO), fund managers, compliance officer, sales head, investor relations officer, heads of other departments, and dealers of the asset management firm.  

In a circular issued in April, Sebi had said a part of compensation of such staffers will be paid in the form units of scheme in which they have a role.  

"A minimum of 20 per cent 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," it had said.  

The compensation paid in the form of units needs to be proportionate to the asset under management (AUM) of the schemes.  

For this purpose, exchange-traded funds (ETFs), index funds, overnight funds and existing close ended schemes will be excluded.  

The compensation needs to be paid proportionately over 12 months on the date of payment of such salary, perks, bonus or non-cash compensation. In case compensation is paid in the form of employee stock options, the date of exercising such option will be considered as the date of such payment.  

Sebi said such mutual fund units would be locked in for a minimum period of three years or tenure of the scheme, whichever is less.  

Coming out with a detailed framework, it had said the provisions of the circular will not be applicable to key employees having oversight only over ETFs, index funds, overnight funds and existing close-ended schemes.