SEBI Eases 'Skin in the Game' Rules for Mutual Fund Employees

The Securities and Exchange Board of India (SEBI) has amended its "skin in the game" rules for employees of mutual funds, adopting slab-wise investment system based on salary levels. The changes, which will come into effect on April 1, 2025, are geared towards easier compliance but aligning employee incentives with investors. Earlier, employees of AMCs were required to invest 20% of their gross annual remuneration in the mutual funds that they manage. According to the new regulations:

• Employees with incomes below ₹25 lakh are exempted from compulsory investments.
• Employees in the ₹25-50 lakh bracket have to invest 10-12.5% of their salary.
• Employees in the ₹50 lakh-₹1 crore CTC bracket have to contribute 14-17.5%.
• Salaries in excess of ₹1 crore have to be invested at 18-22.5%.

Lock-ins have been modified, with exemptions for retirees and lesser lock-ins for resignations. Disclosure measures involve quarterly disclosures by AMCs. The step is likely to ease compliance burdens without losing investor confidence.

Sources: Economic Times, Moneycontrol, Business Standard