The Securities and Exchange Board of India (Sebi) has set up two separate expert groups to examine the roles, eligibility criteria and functions of sponsors and trustees at asset management companies (AMCs)
A sponsor is like a promoter who brings in the capital for setting up an AMC, while a trustee plays a supervisory role and is tasked with protecting investors interest.
In a release, Sebi has said an alternative set of eligibility requirements can be introduced to enable new players who otherwise aren’t eligible to act as a sponsor.
“This is expected to not only foster competition in the mutual fund industry but also facilitate consolidation in the industry through mergers and acquisitions so as to reap economies of scale and scope. This is also expected to facilitate fresh flow of capital into the industry and to foster innovation,” the regulator said.
The working group on sponsors will be chaired by Balasubramanian, MD & CEO, Aditya Birla Sun Life AMC.
Sebi has hinted that it is looking at allowing private equity (PE) players to set up AMCs.
It has said the terms of reference for the working group is “to recommend mechanisms for addressing conflict of interest that may arise if pooled investment vehicles/ private equity act as sponsor; and to examine the need for sponsor to dilute its stake in asset management company from the existing requirement of holding at least 40 per cent of the net worth and the alternative pathways that may be adopted by the sponsors in this regard.”
Meanwhile, the working group on MF trustees will be chaired by Manoj Vaish, Independent Trustee, Mirae MF.
The terms of reference for this group include “determining whether certain obligations of operational nature can be delegated to AMC; to identify those responsibilities for which trustees can avail the services of professional assurance agencies; and to recommend required financial resources to be made available to trustees to independently discharge their obligations.”
In the past, experts have called to review the organisation structure of an AMC and the need to rethink responsibilities of an AMC, its sponsor and trustees.
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
RECOMMENDED FOR YOU