The new live might have a control on the holding pattern of UTI quality Management Company (AMC), requiring its promoters to lower their stake to 10 per cent or below in next one year.
State Bank of Bharat (SBI), geographic region commercial bank (PNB), Bank of Baroda (BoB) and insurance Corporation (LIC) are having their own mutual funds and at a similar time they hold 18.24 per cent stake every in UTI AMC.
The board of Securities associate degreed Exchange Board of Bharat (Sebi) has set that any investor owning a minimum of 10 per cent stake in an AMC won't be allowed to possess ten per cent or additional stake in another fund house operational within the country, Sebi Chairman Ajay Tyagi told reporters here.
Further, a sponsor of a fund, its associates, cluster company and its quality management company are going to be restricted from holding ten per cent or additional stake in an exceedingly rival AMC.
In addition, such entities are going to be barred from having a illustration on the board of another fund house.
"There are going to be no conflict with the UTI Act. They (shareholders) of UTI medium frequency can have to be compelled to scale back their stake to 10 per cent every among a year," Tyagi aforementioned in an exceedingly reply to a question .
The moves are aimed toward avoiding any conflict of interest and facilitate in strengthening the governance structure for mutual funds.
In addition, Sebi has set to return out with a contemporary consultation paper on advisor so as to segregate informatory and therefore the role of a distributor, Tyagi said.
However, fund distributors whereas distributing the investment product will justify the options of the merchandise to shopper.
To prevent the conflict of interest that exists between 'advising' of investment merchandise and 'selling' of investment merchandise by a similar entity/person, there ought to be clear segregation between these 2 activities, the regulator aforementioned.
Existing registered investment advisers UN agency are giving distribution services through a separate division would incline associate degree choice to make a choice from providing investment recommendation and distribution service before March 31, 2019.
From Apr 1, 2019, any person, as well as their immediate relatives or holding or subsidiary or associate entity shall supply either investment recommendation or distribution services.
Sebi had 1st issued a discussion paper that made public the road map of distribution and recommendation in Oct2016 and a revised consultation paper was issued in Gregorian calendar month.
Further, the regulator can give a further technique -- qualified institutional placement (QIP) -- route for listed entities to realize the minimum public holding needs
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