The Securities and Exchange Board of India (Sebi) has launched a consultation paper to examine the role and responsibilities of mutual fund (MF) trustees.
The consultation also invites views on a number of issues, including various aspects of the boards of asset management companies (AMC) to protect the interest of unitholders across different products and offerings.
In order to bring additional accountability to the board of an AMC, the capital markets regulator has suggested several amendments to mutual fund regulations.
The planned amendments are aimed at allowing the board of AMC to comply with the regulations.
Sebi further proposed that AMCS should form a ‘Unit Holder Protection Committee’ across all products and services to independently analyse decisions of AMC from unit-holders’ point of view.
Set to open till 24 February this year, the consultation further recommends the creation of a common platform for mutual funds to make public announcements.
Sebi said in the consultation paper: “In view of the increasing scale and reach of the Mutual Fund industry, trustees’ role in respect of unitholders’ protection assumes even greater significance.”
Currently, India’s mutual fund regulations allow two structures for trustees, namely corporate structure and board of trustees structure.
Sebi added: “It may be desirable to have a corporate form for trustees in view of perpetuity and financial independence.
“In this regard, it is proposed to provide a period of one year for existing trustees with a board of trustee structure to convert into a trustee company, from governance point of view and consistency in applicability of provisions.”