SEBI Eases Investment Rules for Mutual Fund Employees

SEBI has amended the 'skin in the game' policy for mutual fund employees, reducing mandatory investment percentages based on salary brackets. The new rules, effective April 2025, require employees to invest a smaller portion of their salary in mutual funds they manage. The changes aim to better align employee and unitholder interests.

Addressing concerns regarding the 'skin in the game' mandate for mutual fund employees, SEBI has adjusted the required investment percentages for employees, including CEOs and fund managers, based on their salary brackets. These changes are designed to make investment obligations more equitable across varying compensation levels.

Previously, designated employees had to invest 20% of their annual salary in the funds they oversaw, with investments locked in for three years. SEBI's new framework, effective from April 2025, reduces investment obligations based on salary and includes provisions for those earning above Rs 25 lakh, requiring a minimum of 10% of their salary to be invested.

The reforms also address compliance and disclosure requirements. Reduced frequencies for disclosures, shorter lock-in periods for departing employees, and guidelines for managing liquid funds are part of the restructure. The initiative aims to synchronize the goals of Asset Management Company employees with the interests of mutual fund unitholders.

(With inputs from agencies.)