SEBI constitutes Two Working Groups for Mutual Funds on Sponsors and on Trustees

The Securities and Exchange Board of India (SEBI) has established 2 separate Working Groups for Asset Management Companies (AMC). The purpose of the 2 working groups are; 

i.To review the Role and Eligibility of a Sponsor of a Mutual Fund to facilitate growth and innovation in the industry.

• Sponsor is a promoter who brings in the capital for setting up an Asset Management Companies (AMC).

ii.To streamline the role and obligations of Trustees of Mutual Funds.

• Trustee is who plays a supervisory role and is tasked with protecting investors’ interests.

Chairpersons of the working group: 

i..The working group on sponsors will be chaired by A.Balasubramanian, Managing Director(MD) & Chief Executive Officer(CEO) of Aditya BirlaSun Life AMC Limited and Chairman, Association of Mutual Funds in India(AMFI). 

ii.The working group on MF trustees will be chaired by Dr Manoj Vaish, Independent  Trustee, Mirae Mutual Fund. 

Working group on sponsors:

The term of the reference of the working group:

• To recommend an alternative set of eligibility criteria for entities to act as sponsors
• To review the existing eligibility requirements for being a sponsor
• To recommend mechanisms for addressing conflicts of interest that may arise if pooled investment vehicles or private equity act as sponsors
• To examine the need for a sponsor.
• To dilute its stake in asset management companies from the existing requirement of holding at least 40% of the net worth and the alternative pathways that may be adopted by the sponsors in this regard.

Working group on MF trustees:

the terms of the reference of the Working Group:

• To examine the obligations on trustees by various provisions of the SEBI (Mutual Fund) Regulations, 1996 and circulars issued under them to determine whether certain obligations of operational nature can be delegated to AMC.
• To identify those responsibilities for which trustees can avail of the services of professional assurance agencies.
• To recommend required financial resources be made available to trustees to independently discharge their obligations.

Recent Related News:

Securities and Exchange Board of India (SEBI) has restructured its advisory committees that include the secondary market, mutual funds, corporate bonds and securitisation, and Information Systems.
Member – 17 Members
Current Chairperson – Madhabi Puri Buch, ex-whole time member of SEBI.

About Securities and Exchange Board of India (SEBI):
SEBI was constituted as a non-statutory body on 12th April 1988 and established as a statutory body in the year 1992 and the provisions of the Securities and Exchange Board of India Act, 1992 (15 of 1992) came into force on 30th January 1992.
Chairperson– Madhabi Puri Buch
Headquarters– Mumbai, Maharashtra