In response to a request of AMFI and the Indian Association of Alternative Investment Funds (IAAIF), SEBI has given three months extension to fund houses and AIF players to follow a ‘Stewardship Code’ in relation to their investment in listed equities.
Now, fund houses and AIFs will have to comply with norms related to stewardship code by July 1, 2020.
The Stewardship Code stipulates that institutional investors such as MFs and AIFs should enhance monitoring and engagement with their investee companies. For instance, institutional investors should engage with investee companies on operational performance, financial performance, strategy, corporate governance, remuneration, ESG guidelines and so on. The regulator feels such increased engagement would improve corporate governance and benefit clients of institutional investors.
SEBI defines such activities as ‘Stewardship Responsibilities’ of institutional investors. The ‘Stewardship Code’ is a principles-based framework to fulfil these responsibilities.
