Mumbai: The Securities and Exchange Board of India (Sebi) on Monday said its proposed skin-in-the-game rule for junior employees of mutual funds would be implemented in a phased manner.
Initially from October 1, junior employees will be required to invest up to 10% of their compensation in mutual fund units of the fund house. This will be increased to 15% from October next year and then brought up to 20% in 2023.
The regulator has defined a junior employee of an asset management company as one below 35 years of age. However, chief executives, fund managers and heads of any department would be required to invest up to 20% of their salaries in mutual fund units from next month and these would be locked in for three years. In April, Sebi had mandated that a part of the compensation of key employees of AMCs be paid in the form of units of mutual fund schemes in which they have a role or oversight.
Many fund managers and key personnel have investments in existing schemes. “Employees may set off their existing investments, if any, against the fresh investments as required in the same schemes, which is welcome,” said a CEO at a fund house.