After consultation with SEBI, the compliance officials of a few AMCs have concluded that their fund houses can continue to do IAP with distributors but without any remuneration to them.
Earlier in April, SEBI pointed out instances where AMCs have used IAP corpus to create awareness among distributors’ clients through the distributor websites or magazines. SEBI said, “It has been observed that AMCs are conducting IAPs on distributor’s platforms viz. web banner, distributors sending e-mailers to investors, publishing education advertisement in monthly magazine of distributors etc.”
Based on the SEBI circular, a few AMCs have drafted do’s and don’ts for utilization of IAP corpus. These AMCs have decided not to make payment to distributors for carrying out IAPs. Instead, fund houses would make payments to the vendors directly.
Also, AMCs are not allowed to run IAP campaigns on website, mobile app or platforms of distributors and RIAs. AMCs cannot spend IAP corpus in publishing advertisements on web banner, emailers and magazines of distributors and RIAs.
In addition, AMCs will have to ensure that IAPs through distributors and RIAs should not be restricted to their clients. Also, alcohol and exotic dinners are not allowed for IAPs.
Other measures to be followed by these AMCs while conducting IAPs
- To register details of their IAPs on the AMFI portal
- AMFI will generate a module ID for these IAPs based on which AMCs can generate bills
- All invoices to be supported by a list of participants, copy of presentation, photo of the event showing AMFI approved presentation played or any other document which can be provided as audit evidence of genuine IAP
- A declaration of the regional head or zonal head confirming that all necessary controls were placed and IAP is done within the guidelines and spirit as per SEBI norms
