Sebi announces new guidelines on compensation of key mutual fund employees

proportionate to the AUM of the schemes in which the key employee has a role. For this purpose, Exchange Traded Funds (ETFs), Index Funds, Overnight Funds, and existing close-ended schemes shall be excluded, Sebi said.

b) Paid proportionately over 12 months on the date of payment of such salary/ perks/ bonus/ non-cash compensation. In the case of compensation paid in the form of employee stock options, the date of exercising such option shall be considered as the date of such payment.

c) Locked-in for a minimum period of 3 years or tenure of the scheme whichever is less.

Further, with a view to allowing the key employees to diversify their unit holdings, in the case of dedicated fund managers managing only a single scheme / single category of schemes, 50 percent of the aforementioned compensation shall be by way of units of the scheme/category managed by the fund manager and the remaining 50 percent can, if they so desire, be by way of units of those schemes whose risk value as per the risk-o-meter is equivalent or higher than the scheme managed by the fund manager.

"No redemptions of the said units shall be allowed during the lock-in period. However, AMC may decide to have a provision of borrowing from the AMC by Key Employees against such units in exigencies such as medical emergencies or on humanitarian grounds, as per the policy laid down by the AMC," Sebi said.

In addition, no redemption of such units shall be allowed within the lock-in period in case of resignation or retirement before attaining the age of superannuation as defined in the AMC service rules.

However, in case of retirement on attaining the superannuation age, such units shall be released from the lock-in and the key employee shall be free to redeem the units, except for the units in close-ended schemes where the units shall remain locked in till the tenure of the scheme is over.

Also, units allotted to the key employees shall be subject to clawback in the event of a violation of the code of conduct, fraud, gross negligence by them, as determined by Sebi. Upon clawback, the units shall be redeemed and the amount shall be credited to the scheme.