SEBI introduces amendments to ease regulations for AMCs and ensure unitholder protection

The changes by SEBI will focus on facilitating the ease of doing business for AMC employees while ensuring transparency

SEBI has introduced amendments to the Mutual Fund Regulations, 1996, aimed at easing regulatory requirements for Asset Management Companies (AMCs) and protecting the interests of unitholders. This was announced as a part of the market regulator’s Board meeting on December 18.

As per a press release from SEBI, the changes will focus on facilitating the ease of doing business for AMC employees while ensuring transparency. Key relaxations include reducing the minimum investment amount for designated employees, lowering the frequency of disclosures, shortening lock-in periods for employees who have resigned, and empowering Nomination and Remuneration Committees to verify compliance.

Additionally, employees managing liquid funds will benefit from relaxed requirements, and redemption norms for AMC employees have been simplified. Stress-testing results for all mutual fund schemes must still be disclosed.

In a separate move, SEBI has also set timelines for deploying funds collected through New Fund Offers (NFOs). Under the new framework, AMCs are required to allocate funds raised in NFOs within 30 days, as per the scheme's asset allocation. Investors will have the option to exit the scheme without incurring exit loads if fund managers fail to meet the timeline. To address potential mis-selling in NFOs, distributors will receive the lower commission in switch transactions between two schemes.

This framework aims to encourage AMCs to raise only the funds they can deploy promptly, while giving investors in open-ended funds the flexibility to invest later at prevailing NAVs. These amendments are designed to create a more efficient and transparent mutual fund ecosystem.