Market regulator Securities and Exchange Board of India (SEBI) in a circular on Wednesday said that minimum of 20% of the salary of the key employees of asset management companies (AMCs) to be in Mutual Fund units.
In order to align the interest of the Key Employees of the AMCs with the unitholders of the mutual fund schemes, it has been decided that a part of compensation of the Key Employees of the AMCs shall be paid in the form of units of the scheme(s), the circular stated.
As per the circular, minimum of 20% of the salary/perks/ bonus/ non-cash compensation (gross annual CTC) net of income tax and any statutory contributions (i.e. PF and NPS) of the Key Employees of the AMCs shall be paid in the form of units of Mutual Fund schemes in which they have a role/ oversight.
Key employees include CEO, CIO, COO, fund managers and others.
Key employees of the AMCs shall include:
i. Chief Executive Officer (CEO), Chief Investment Officer (CIO), Chief Risk Officer (CRO), Chief Information Security Officer (CISO), Chief Operation Officer (COO), Fund Manager(s), Compliance Officer, Sales Head, Investor Relation Officer(s) (IRO), heads of other departments, Dealer(s) of the AMC;
ii. Direct reportees to the CEO (excluding Personal Assistant/Secretary); iii. Fund Management Team and Research team;
iv. Other employees as identified & included by AMCs and Trustees.
Exchange Traded Funds (ETFs), Index Funds, Overnight Funds and existing close ended schemes have been excluded from the order. The regulator also added that the compensation paid as mutual fund units will be locked-in for a minimum period of three years or tenure of the scheme, whichever is less.
The provisions of this circular shall be applicable with effect from July 01, 2021, it said.
