SEBI Update – SEBI (Mutual Funds) (Amendment) Regulations, 2025
The Securities Exchange Board of India (“SEBI”), in exercise of powers conferred under Section 30 read with Section 11(2)(c) of the Securities and Exchange Board of India Act, 1992, vide Notification No. SEBI/LAD-NRO/GN/2025/230[1], dated February 14, 2025, issued the Securities Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2025 (“Amended Regulations”).
The key modifications under the Amended Regulations are as follows:
I. Insertion of Regulation 25(16)(B)
- SEBI has introduced a new requirement mandating an Asset Management Company (“AMC”) to invest a specified percentage of the remuneration of its employees in units of mutual fund schemes.
- The percentage to be invested shall be determined on the basis of the designation or role of the employees and the manner of investment shall be prescribed by SEBI.
- This provision is intended to align the interests of AMC employees with those of the investors, fostering a more accountable and investor-centric approach within AMCs.
II. Insertion of Regulation 25(30):
AMCs shall conduct stress testing for certain schemes, as specified by the Board and the results of such stress testing must be disclosed in a format and manner as prescribed by SEBI.
III. Insertion of Regulation 35(5):
SEBI has mandated that the funds raised through a New Fund Offer (NFO) must be deployed within a specific time period, as prescribed by SEBI from time to time.
IV. Insertion of Regulation 52(4A):
- SEBI has introduced a provision requiring AMCs to disclose and manage charges, commission, and fees related to the distribution of mutual fund schemes.
- These charges must be paid in a manner that is consistent with the regulations set forth by SEBI from time to time.
V. Amendment to Regulation 52(5):
The reference to Regulation 52(2) and Regulation 52(4) under the Regulation 52(5) has been updated to include Regulation 52(4A) pertaining to the requirement of disclosure of charges, commission and fees by the AMCs.
[1]https://www.sebi.gov.in/legal/regulations/feb-2025/securities-and-exchange-board-of-india-mutual-funds-amendment-regulations-2025_92004.html