AMFI has clarified that distributors will have to submit their declaration of self-certifications (DSCs) by December 31, 2019 to avoid forfeiture of commission. That means fund houses cannot pay commission withheld due to non-submission of DSCs from January 1 onwards.
While distributors are required to submit DSC within three month of the end of financial year i.e. June 30, AMFI has given them six-month grace period to comply with the SEBI norms i.e. until December 31.
So far, there was no stipulated timeframe for AMCs to pay withheld commission because of non-submission of DSCs. Distributors used to get their withheld commission as and when they submitted their DSC.
In a communication, AMFI said, “The matter was reviewed by AMFl's Standing Committee on Mutual Fund Distributors (ARN Committee) and the committee also endorsed the above view. Since a grace period of 6 months is allowed for renewal of ARN, the committee proposed that on the same logic, a maximum period of 6 months from June 30 (being the due date for submission of annual DSC) may be allowed for submission of the annual DSC, i.e., up to Dec. 31, failing which, the commission withheld due to non-submission of DSC shall be forfeited.”
“Accordingly, effective from the year ended March 31, 2019 onwards, each mutual fund agent/distributor shall submit an annual DSC in the prescribed format within 3 months after the end of each Financial Year, i.e., by June 30, failing which, payment of all accrued commission shall be withheld by the AMCs, till the time the DSC is submitted. Further, a grace period of 6 months from June 30 (being the due date for submission of annual DSC), i.e., up to Dec. 31 shall be allowed for submission of the DSC. If the annual DSC is not submitted by Dec. 31, the commission withheld for non-submission of DSC shall stand forfeited.”
