SEBI has put forward this proposal regarding investment rules for Mutual Fund employees, know the whole thing

Market regulator SEBI has taken a special initiative for the nominated employees of mutual fund companies. SEBI has put forward some proposals on Thursday to ease the rule related to the ‘relationship between risk and responsibility’ for employees. According to the news of Bhasha, these proposals are related to reducing the investment percentage required for the employees of mutual fund (MF) companies, implementing it on the basis of salary category and excluding components like ESOP from the minimum investment calculation.

The purpose of the proposals

According to the news, the aim of these proposals of the Securities and Exchange Board of India (SEBI) is to make compliance easier, especially for employees working in low-paid and operational roles. Currently, MF employees working in positions like Chief Executive Officer (CEO), Chief Investment Officer (CIO) and Fund Manager have to invest 20 percent of their annual salary and allowances in the mutual funds they manage. This amount is locked-in for three years.

Salary can be decided according to category

In its consultation paper, Sebi said the minimum mandatory investment amount could be reduced from 20 per cent and applied in slabs based on the total salary of the employees. The regulator suggested there would be no mandatory investment for employees earning less than Rs 25 lakh, while 10 per cent with salary between Rs 25 lakh-50 lakh, 14 per cent with Rs 50 lakh-Rs 1 crore and 18 per cent with salary above Rs 1 crore.

also proposed to allow flexibility

Sebi has also proposed to relax mandatory investment conditions for non-investing employees such as chief operating officers (COO) and heads of sales and allow flexibility based on the role and activities of each employee within fund companies. Under the current rules, the same percentage of investment is required for all designated employees of a company managing a mutual fund. Sebi has suggested excluding non-cash components such as employee stock option plans (ESOPs) from the minimum investment calculation.

Also, SEBI has proposed to allow premature release of units on resignation of employees, subject to restrictions. Under the current rules, if employees leave the job before the age of retirement, the units allotted to them are locked. In case of retirement, lock-in is removed except in case of close-ended schemes.