Clarifications with respect to Circular dated April 28, 2021 on ‘Alignment of interest of Key Employees (‘Designated Employees’) of Asset Management Companies (AMCs) with the Unitholders of the Mutual Fund Schemes’

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....of the Mutual Fund Schemes' 1. SEBI, vide Circular no. SEBI/HO/IMD/IMD-I/DOF5/P/CIR/2021/553 dated April 28, 2021, has provided that a part of the compensation of Key Employees of the AMCs shall be paid in the form of units of the scheme(s) in which they have a role or oversight. 2. Based on the representations received from the Mutual Fund Industry and recommendations of Mutual Funds Advisory Committee ('MFAC'), it has been decided to provide clarity on certain provisions and on the applicability of the aforementioned circular. The said clarifications are given in Annexure to this circular. 3. All other provisions mentioned in the circular SEBI/HO/IMD/IMD-I/DOF5/P/CIR/2021/553 dated April 28, 2021 and circular SEBI/HO/IMD/IMD-I/DOF5/P/C....

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....P/CIR/2021/582 dated June 25, 2021, other designated employees shall be mandatorily required to invest 20% as specified under para 2(i) of the Alignment circular with effect from October 01, 2021. c) The phased implementation for junior employees shall cease to apply from the date such employee attains the age of 35 years. For this purpose, a designated employee of the AMC below the age of 35 years (excluding CEO, head of any department and Fund Managers), shall be deemed as "junior employee". 4. With regards to the provisions under para 2 of the Alignment circular, it is clarified that: 4.1. Investment in units of the scheme, shall be made on the day of payment of salary. 4.2. The previous month's closing AUM shall be taken for apport....

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....heir units in open ended schemes twice in a financial year, with the prior approval of the Compliance Officer by following the procedure prescribed below: a. Any time after the expiry of the mandatory lock-in period, the designated employee may make application to the Compliance Officer for redemption of the units. The Compliance Officer shall decide on the said application within 5 days of receipt of such application; b. If approved, the designated employee may submit request for redemption of such units within 10 trading days from the date of grant of such approval; c. The unexecuted portion, if any, shall not be rolled over on the expiry of the period mentioned at (b) above. However, a second application can be made within the year....

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....in the exclusions mentioned in the para 2(ii)(a) of the Alignment circular. 4.11. In all cases of deferred compensation including Employee Stock Options, the AMC shall decide whether the deduction of 20% of such deferred compensation (perquisite value less taxes), should be on the date of grant or exercise. However, the policy should be same for all Designated Employees of the AMC, in a given financial year. 4.12. Any unconditional compensation in any form which was granted before the issuance of the Alignment circular but is unpaid as on the date of the Alignment circular i.e, April 28, 2021 shall not be included in the CTC. 4.13. Para 2(iii) of the Alignment circular allowing diversification of the unit holdings to dedicated fund manag....