Sebi Eases ‘Skin-in-the-Game’ Norms for AMC Employees

Key Changes

• Replaces the 2021 rule that mandated 20% of senior executives’ salaries in mutual fund units.
• Introduces a slab-based system where investment obligations vary by salary (CTC) and designation.

Investment Slabs

• Slab 0 (CTC < ₹25 lakh): No mandatory investment.
• Slab 1 (CTC ₹25–50 lakh):
  • Must invest 10% of gross CTC or 12.5% (excluding ESOPs) in schemes they oversee.
• Slab 2 (CTC ₹50 lakh – ₹1 crore):
  • 14% investment (or 17.5% excluding ESOPs).
• Slab 3 (CTC above ₹1 crore):
  • 18% investment (or 22.5% excluding ESOPs).

Employee Categories

• Category A:
  • Includes CEOs, CIOs, fund managers, and key investment staff.
  • Must comply fully with slab-based obligations.
• Category B:
  • Includes those directly reporting to the CEO and heads of non-investment departments.
  • Investment requirement limited to slab 0 or slab 1, regardless of CTC.
  • Employees managing liquid funds must adhere to slab 1, even if they qualify for higher slabs.

Lock-in Period Revisions

• Superannuation retirement: Lock-in waived (except for closed-ended schemes).
• Early retirement/resignation: Lock-in reduced to 1 year from employment end or completion of the 3-year lock-in, whichever is earlier.

Transparency & Disclosure

• AMCs must disclose total compensation invested by designated employees in scheme units.
• Disclosure to be made on stock exchange websites within 15 days after each quarter-end.