Key AMC officials to get 20% of pay in MF units

In order to align the interest of the key employees of asset management companies (AMCs) with the unitholders of the mutual fund schemes, Sebi on Wednesday 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," Sebi 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/ 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.

While Sebi has taken steps to standardise the scheme categories and characteristics of each category, the management of risk return profile of the schemes rests with the AMCs and the key employees.

"The move will bring accountability of the performance of the schemes that are dependent upon the key employees of the mutual fund / AMC to share the risk at par with unitholders of the schemes not just with code of conduct as it was earlier but also personal financial accountability with a portion of remuneration getting invested in such schemes," said Omkeshwar Singh, Head RankMF, Samco Securities.