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AMFI has relaxed the commission forfeiture norms for the non-renewal of ARNs.
Under the new guidelines, instead of forfeiting the entire trail commission on non-renewal of ARNs after three months, the AMCs will forfeit the commission only for the non-compliant period. Additionally, the withheld commission on assets built before the expiry of the ARN will be repaid.
For example, if an ARN is valid until March 10, 2025 and is renewed on August 10, 2025—which is after the three-month grace period—only the trail commission withheld from March 11, 2025, to August 9, 2025 will be forfeited.
Moreover, MFDs will still receive the trail commission on business procured up to March 10, 2025, in the above scenario. These norms will apply to ARNs expiring after April 1, 2025.
Till March 31, 2025, the industry forfeited the entire trail commission of distributors, even on business built before the expiry of ARNs if they did not renew their ARNs within three months of expiry. The relaxed norms will ensure business continuity for MFDs.
Other rules remain unchanged. However, for the benefit of readers, here are the other norms and current norms related to commission and ARN renewal:
- If the ARN is renewed within three months of expiry, distributors receive the withheld commission from the date of expiry to the date of ARN renewal
- If the ARN is renewed after three months, the withheld commission incurred between the date of expiry and the date of renewal will be forfeited
- In this case, the trail commission accrued on previous assets will be released upon ARN renewal
AMFI stated that AMCs must inform clients of the concerned MFDs through written communication that the validity of their distributor has expired and has not been renewed.
AMFI also mentioned that this decision was taken by the AMFI Standing Committee on Certified Distributors (ARN Committee).
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