The previous mandate required designated employees to get 20% of their remuneration in the units of their mutual funds, to ensure that their interests are aligned with the unitholders.
“A minimum slab wise percentage of the salary/ perks/ bonus/ non-cash compensation (gross annual CTC) net of income tax and any statutory contributions (i.e. PF and NPS) of the Designated Employees of the AMCs shall be mandatorily invested in units of Mutual Fund schemes in which they have a role/oversight,” a Sebi circular issued today said.
The Sebi circular calls it a move to simplify compliance while ensuring better alignment between the interests of AMCs and mutual fund investors.
Under the revised provisions, the employees whose cost-to-company (CTC) on an annual basis is below Rs 25 lakh will not be required to take any portion of their pay in the units.
The investment requirement varies based on salary brackets, ensuring that higher-paid employees contribute a more significant portion.To meet their compliance obligations, AMCs can choose between two options—one in which the minimum percentage will include Employee Stock Ownership Plans (ESOPs) and the other excluding them.Investment based on gross CTC slab:
— Slab 0: Rs 0-25 lakhs | Nil
— Slab 1: Above Rs 25 lakhs but below Rs 50 lakhs | 10% of gross annual CTC net of income tax and any statutory contributions in option 1 and 12.5% of gross annual CTC net of income tax, any statutory contributions and ESOPs in option 2.
— Slab 2: Above Rs 50 lakhs but less than Rs 1 crore | 14% of gross annual CTC net of income tax and any statutory contributions in option 1 and 17.5% of gross annual CTC net of income tax, any statutory contributions and ESOPs in option 2.
— Slab 3: Above Rs 1 crore | 18% gross annual CTC net of income tax and any statutory contributions in options 1 and 22.5% of gross annual CTC net of income tax, any statutory contributions and ESOPs.
The AMCs will have the option to adopt the first Option or the second option for its designated employees those with no ESOP component as part of their CTC will be covered under the first option.
There will be two categories of employees as well. In Category A, CEO, CIO, fund managers, investment research team, dealers, Chief Risk Officer (CRO), Compliance Officer and members of the investment committee will be covered.
In category B, direct reportees to the CEO (excluding Personal Assistant / Secretary and Category A employees), Chief Information Security Officer (CISO), Chief Operation Officer (COO), Sales Head, Investor Relation Officer(s) (IRO), heads of departments other than investment and risk functions will be covered.
The amendments were notified on February 14, 2025 and March 04, 2025.
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