Sebi further said that persons having any material pecuniary relationship with these entities, which in the trustees judgement may affect the directors independence, shall be treated as associate directors. Sebis move gains significance in the light of Amfi appointing a committee headed by Alok Vajpai of DSP Merrill Lynch to study the framework for the introduction of professional trusteeships in the local mutual funds (MFs) industry.
The committee will focus on feasibility issues pertaining to the setting up of trusteeship companies in India, which may act as trustees for several MFs. Currently, a three-tier structure exists in the Indian MF industry sponsor, trustee and AMC.
According to Sebi MF regulations, an independent trustee should not be associated in any manner with the sponsor. Earlier, Sebi had clarified to all MFs in December (2001) that certain categories of persons cannot be considered as independent directors of AMCs and trustee companies.Sebi has also advised industry participants to classify their existing directors of AMCs and trustee firms as associates or independent in the light of this clarification. It has also clarified that, in case the composition of directors does not comply with the requirement of 50 per cent or 2/3rd independent directors of AMC or trustee company, the MF should inform the regulator about the steps proposed to be taken by them to ensure compliance with the Regulations.
Considering these clarifications, the format for submitting the bio-data of directors of AMCs and trustees to Sebi will also get changed.