capital market supervisor SEBI A regulatory framework for self-sponsored asset management companies (AMCs) along with private equity funds sponsored by mutual fund houses came out on Friday.
Under the private equity (PE) fund framework, SEBI said the applicant must have at least five years of experience in the capacity of a fund manager and investment experience in the financial sector. It should have managed, committed and drawn up capital of at least Rs 5,000 crore.
A mutual fund sponsored by a PE shall not participate as an anchor investor in a public issue of an investee company where the sponsor has 10 per cent or more investment or board representation in any schemes and funds managed by the PE.
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“The fit and proper criteria of any applicant PE to be a sponsor of a mutual fund shall be ascertained through its conduct in the respective home jurisdiction, in respect of experience, track record and eligibility,” Sebi said in a circular.
In order to promote industry penetration and facilitate new types of players to act as sponsors of mutual funds, an optional set of eligibility criteria has been introduced.
This is to facilitate inflow of capital into the industry, promote innovation, encourage competition and provide ease of consolidation and exit for existing sponsors.
Currently, any entity that holds 40 per cent or more stake in a mutual fund is considered a sponsor and is required to meet the eligibility criteria.
Also, SEBI said that “self-sponsored AMCs” can continue mutual fund business. This is subject to the AMC fulfilling certain conditions. The move will allow the original sponsor to voluntarily de-link itself from the MF without the need to engage a new and eligible sponsor.
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As per SEBI, an AMC can become self-sponsored subject to certain conditions – the AMC should be in business in financial services for at least 5 years, should have positive net worth in all the last five years, and should be net. 10 crore profit in each of the last five years.
Any sponsor proposing to divest should have been a sponsor of the mutual fund concerned for at least five years and the shareholding proposed to be divested by the sponsor should not be under any encumbrance or lock-in.
Any sponsor proposing to demerge can reduce the shareholding below 10 per cent within 5 years in case of listed AMCs, while this period will be three years in case of unlisted AMCs.
After a sponsor separates from the AMC, all shareholders of such AMC will be classified as financial investors and the upper limit of shareholding for such financial investors will be less than 10 per cent.
A self-sponsored AMC will have to continuously maintain the minimum net worth requirement.
SEBI, however, said that an unrelated sponsor or a new entity can become a sponsor of a mutual fund under certain conditions- if the AMC fails to meet the criteria of a self-sponsored AMC.
Further, a curing period of one year will be provided within which, the AMC will have to meet the norms of self-sponsored AMC.
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Also, SEBI came out with guidelines on deployment of liquid net worth by AMCs.
SEBI said AMCs will have to deploy the required minimum net worth in cash, money market instruments, government securities, treasury bills, repos on government securities, or listed AAA-rated debt securities without bespoke structures, credit enhancements or embedded options. ,
In case of change in control of the existing AMC due to acquisition of shares, the sponsor shall ensure that the positive liquid net worth of the sponsor is to the extent of the aggregate par value or market value of the shares offered. earned, whichever is higher.
The Securities and Exchange Board of India (SEBI) said the new rules will come into effect from August 1, while those relating to deployment of liquid net worth by AMCs will come into effect from January 1, 2024.
(This story has not been edited by News18 staff and is published from a syndicated news agency feed – PTI,