Market regulator Securities and Exchange Board of India (SEBI) in a circular on Wednesday said that minimum of 20% of the salary of the key employees of asset management companies (AMCs) to be in Mutual Fund units.
The compensation paid in the form of the units shall be proportionate to the assets under management of the schemes in which the key employee of the fund house has a role.
In case of a fund manager managing only one scheme, he has the option to receive half of the compensation in the units of the scheme he manages. And other half would come by way of other schemes whose risk profile (as defined by Sebi’s risk-meter guidelines) are the same or higher.
In simple words, an equity fund manager would most likely get allotted only equity funds’ units. These units allotted to key employees must be locked in for three years, unless the scheme is wound up before that.
To maintain the guideline in letter and spirit, Sebi has mandated that index funds, exchange-traded funds, overnight funds and existing close-ended schemes will be excluded from unit allocation. If the employee retires at the age of superannuation, then the units (excluding units of closed-ended schemes) can be redeemed. The units cannot be sold if the employee resigns or retires before the age of superannuation.
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This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.
