Sebi partially accepts Kotak panel proposals
MUTUAL FUNDS Regulator clears suggestions on corporate governance, MFs MUMBAI:
Markets regulator Sebi on Wednesday partially accepted the recommendations of Uday Kotak committee on corporate governance as well as reduced the additional expenses charged on mutual fund schemes.
During its meeting here, the Sebi board also cleared various proposals including allowing stock exchanges to introduce shared co-location facilities, strengtheningequityderivatives market and amending takeover regulations.
At present, mutual funds are permitted to charge additional expenses of up to 20 basis points of the daily net assets of their schemes in lieu of the exit load credited in the scheme. Based on data and the recommendations of Mutual Fund Advisory Committee (MFAC), the board has approved the proposal to reduce the maximum additional expense allowed for a scheme to 5 basis points, the regulator said in a release. A basis point is one-hundredth of a percentage point.
Among the recommendations made by the Uday Kotak panel, Sebi has accepted around 40 of them without any modification. The accepted proposals include capping the maximum number of directorship in listed companies to seven by April 1, 2020.
Addressing the media after the board meeting, Sebi chairman Ajay Tyagi said Sebi has decided to partially accept the committee’s recommendations. Out of the 80 odd recommendations, the watchdog would not be accepting around 18 of them. Besides, the regulator plans to amend takeover regulations, permit additional time for entities to increase open offer price.
Meanwhile, Principal Mutual Fund units on Wednesday settled with Sebi the proceedings related to alleged violation of norms pertaining to total expense ratio (TER) on a payment of nearly ₹78 lakh towards settlement charges.
TER is a percentage of a scheme’s corpus that a mutual fund house charges towards expenses including administrative and management.
Sebi had initiated adjudication proceedings against Principal Mutual Fund, Principal Trustee Company and Principal PNB Asset Management Company for alleged violation of Mutual Fund Regulations pertaining to TER and breach of maximum permissible TER limits. The three units had allegedly miscalculated the total expense ratio in the books of accounts, resulting in breach of maximum permissible TER.
While the adjudication proceedings were in progress, the Principal Mutual Fund, Principal Trustee Company and Principal PNB Asset Management Company had submitted an application for their settlement, Sebi said in an order.
The settlement terms proposed by them were placed before Sebi’s high powered advisory committee, which recommended the case for settlement on payment of ₹25.90 each by the three units.