Sebi eases mutual fund managers' investment rules

The Securities and Exchange Board of India (Sebi) has updated its rules regarding the 'skin in the game' requirements for mutual fund managers. This change allows employees of Asset Management Companies (AMCs) to contribute a percentage of their salary into the funds they manage. The new rules will take effect on April 1, 2025. Previously, employees had to invest 20% of their salaries in mutual fund units to align their interests with investors. Under the new rules, a minimum percentage of their gross annual income will be required based on salary brackets, making it easier for AMCs to comply with the regulations. Employees earning less than Rs 25 lakh per year will not need to make any investment in mutual fund units. For those earning more, the contribution requirements increase with salary. For example, employees with a salary between Rs 25 lakh and Rs 50 lakh must invest 10% or 12.5%, depending on their compensation structure. The revised guidelines specify four salary brackets, with each tier requiring a higher percentage of investment for those earning more. AMCs can choose between two options for compliance, with one option allowing the inclusion of Employee Stock Ownership Plans (ESOPs). The changes also categorize employees into two groups. Category A includes senior roles like CEO, CIO, and fund managers. Category B consists of other key positions like department heads and direct reports to the CEO. These amendments were officially announced earlier this year.