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According to SEBI’s latest circular, designated AMC employees with gross income of over Rs. 25 lakh must invest at least 10% of their gross annual income excluding income taxes and statutory contributions like NPS and PF in the MF schemes of their company.
The gross income also includes any income in the form of company stocks under Employee Stock Ownership Plan (ESOPs). For employees who do not have any part of their income in the form of ESOPs, they must invest a minimum 12.5% of their net income in their schemes.
Previously, the designated employees of AMCs were required to invest at least 20% of their gross salary in their schemes.
The detailed slabs based on gross annual CTC (Cost to Company) are as under:
|
Slabs Based on Gross Annual CTC |
Minimum Percentage to be Invested (for employees with ESOPs) |
Minimum Percentage to be Invested (for employees with no ESOPs) |
|
Option |
Option A |
Option B |
|
Slab 0 (Gross CTC < 25 lakh) |
Nil |
Nil |
|
Slab 1 (Gross CTC > 25 lakh and < 50 lakh) |
10% of gross annual CTC (net of income tax, PF & NPS) |
12.5% of gross annual CTC (net of income tax, PF, NPS and ESOPs) |
|
Slab 2 (Gross CTC > 50 lakh and < 1 crore) |
14% of gross annual CTC (net of income tax, PF & NPS) |
17.5% of gross annual CTC (net of income tax, PF, NPS and ESOPs) |
|
Slab 3 (Gross CTC > 1 crore) |
18% of gross annual CTC (net of income tax, PF & NPS) |
22.5% of gross annual CTC (net of income tax, PF, NPS and ESOPs) |
Category A employees which includes CEO, CIO, fund managers, investment research team, dealers, Chief Risk Officers (CROs), compliance officer and members of the investment committee have slabs applicable based on their CTC.
Category B employees which includes direct reportees to the CEO (excluding personal assistant and category A employees), Chief Information Security Officer (CISO), Chief Operation Officer (COO), sales head, Investor Relations Officer (IRO) and heads of department other than investment and risk functions will have slab 0 or 1 applicable as decided by the AMC based on the employee’s activity.
If designated employees are only associated with liquid schemes, they will have slab 1 applicable irrespective of their CTC. Such employees and other employees who manage multiple schemes including liquid funds can invest up to 75% of their invested amount in other schemes of the AMC with a higher risk. The risk level is decided based on risk-o-meter of the schemes as on previous month.
The units of employees who reach the retirement or superannuation age based on AMC rules will be released from the lock-in and will be available for redemption. However, if the employee resigns or retires before the superannuation age, the lock-in period will be reduced to 1 year from the end of employment or the completion of the 3-year lock-in period, whichever is earlier. This will not be applicable to units of close-ended schemes. The provision of immediate liquidation of units invested in liquid schemes has been cancelled.
The redemption of units by employees will have to comply with SEBI’s insider trading regulations. In case of fraud or code violation, the Nomination and Remuneration Committee of AMC or an equivalent body under the AMC will provide recommendations to SEBI for consideration on action to be taken, after approval of the trustees.
The AMCs can now make the disclosure of aggregate investment made by their employees in their own schemes on websites of stock exchanges on a quarterly basis unlike monthly basis done previously.
This circular will come into effect from April 1, 2025.
