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In a gazette notification, SEBI has directed AMCs to constitute a ‘Unit Holder Protection Committee’ (UHPC).
This committee will have an independent review mechanism that will look at decisions of AMCs from unitholders’ interests. Also, the committee will protect interest of mutual fund investors, redress their grievances and spread awareness and education.
In another major development, SEBI has asked sponsors of mutual fund to increase their net worth from Rs.50 crore to Rs.150 crore. It is not clear if networth requirement is applicable to existing MF sponsors.
Here are other key developments
- The senior management team which includes CEO, COO, Chief Regulatory Officer and all the fund managers should have collective experience of 30 years
- PE firms can become sponsors
- SEBI will allow AMCs to become self-sponsored AMC if they meet certain conditions like minimum 5-year experience in carrying out business in the financial services industry, maintaining positive net worth in all the immediately preceding five years and so on
- Board should monitor securities transactions with brokers and avoid undue concentration of business with any broker. They should also monitor if AMCs is giving undue advantage to any associates
- AMC board should report alerts in true and fair manner to trustees
