Market regulator SEBI has taken a special initiative for employees appointed by mutual fund companies. SEBI on Thursday made some proposals to simplify the ‘risk-liability ratio’ rule for employees. According to Language News, these proposals refer to reducing the investment percentage required for employees of mutual fund (MF) companies, applying it based on salary category and excluding components such as ESOPs from the minimum investment calculation.
purpose of the proposals
According to the news, the purpose of these proposals from the Securities and Exchange Board of India (SEBI) is to facilitate compliance, especially for low-paid employees and those working in operational roles. Currently, MF employees holding positions such as chief executive officer (CEO), chief investment officer (CIO) and fund managers have to invest 20 per cent of their annual salary and allowances in the mutual funds they manage. This amount remains blocked for three years.
The salary can be set according to the category.
SEBI in its consultation paper has said that the minimum mandatory investment amount can be reduced from 20 per cent and can be implemented in a slab based on the total salary of the employees. The regulator suggested that there will be no mandatory investment for employees with income below Rs 25 lakh, while 10 per cent for those with salary between Rs 25 lakh and Rs 50 lakh, 14 per cent for those with salary between Rs 50 lakh and 1 crore rupees and more. of Rs 1 crore. Those who will invest 18 percent.
It was also proposed to allow flexibility
SEBI has also proposed to relax mandatory investment conditions for non-investment employees such as chief operating officers (COOs) and sales heads, and allow flexibility depending on the role and activities of each employee within investment companies. funds. Under current rules, the same investment percentage is required for all designated employees of the company that manages the mutual fund. SEBI has suggested excluding non-cash components like Employee Stock Option Plan (ESOP) from the minimum investment calculation.
Additionally, SEBI has proposed to allow premature release of units in case of resignation of restricted employees. Under current rules, if employees leave work before retirement age, the units allocated to them are locked. In the event of retirement, the lock-in is eliminated except in fixed-term plans.
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