SEBI has directed fund houses not to hold more than 10% stake in other AMCs.
In its board meeting held today in Mumbai, SEBI said, “AMCs may not be allowed to have 10% or more stake in AMCs/ Trustee Companies of any other mutual funds. In addition, AMCs may not be allowed to have representation on the board of the AMC of any other mutual funds.”
This will affect UTI Mutual Fund, which has four stakeholders - State Bank of India, Bank of Baroda, Punjab National Bank and Life Insurance Corp. of India, having their own mutual funds. (Punjab National Bank is reportedly divesting its stake in Principal PNB Mutual Fund) Each of them hold 18.24% stake in UTI MF. US based asset manager T Rowe Price holds 26% stake in UTI MF.
The new norms are aimed at avoiding conflict of interest.
In a circular, SEBI said, “The Board after deliberation on the issue of potential conflict in case of sponsor and its associates or any shareholder of a Mutual Fund having stake or Board representation in Asset Management Company (AMC) and Trustee Companies of another Mutual Fund, decided the following:
A sponsor of a mutual fund, its associate and/or its group company, and it is AMC through the schemes, or otherwise collectively, may not be allowed to:
a. have 10% or more stake in AMCs / Trustee Companies of any other mutual funds.
b. have representation on the board of the AMC / Trustee Company of any other mutual funds.
Any shareholder holding 10% or more stake in an AMC / Trustee Company of a mutual fund may not be allowed to:
a. have 10% or more stake in AMCs / Trustee Companies of any other mutual funds.
b. have representation on the board of the AMC / Trustee Company of any other mutual funds.
III. Any existing non-conformity with the aforesaid requirements may be aligned within a reasonable time.”