CIRCULAR
SEBI/HO/IMD/IMD-PoD-1/P/CIR/2025/36 March 21, 2025
To All,
Mutual Funds (MFs)/
Asset Management Companies (AMCs)/
Trustee Companies/ Board of Trustees of Mutual Funds/
Association of Mutual Funds in India (AMFI)/
Registrars to an Issue and Share Transfer Agent (RTAs)
Madam/ Sir,
Sub: Facilitating ease of doing business relating to the framework on “Alignment of interest
of the Designated Employees of the Asset Management Company (AMC) with the
interest of the unitholders”
1. With an objective to facilitate ease of doing business for Mutual Funds, amendments to SEBI
(Mutual Funds) Regulations, 1996 (‘MF Regulations’) were carried out to relax the
regulatory framework relating to ‘Alignment of interest of the Designated Employees of the
AMCs with the interest of the unitholders’ (hereinafter referred to as ‘skin in the game
requirements’). The amendments have been notified vide notification dated February 14,
2025 (link to the Gazette notification) and March 04, 2025 (link to the Gazette notification).
The said amendments shall be applicable from April 01, 2025.
2. Accordingly, in terms of Regulation 25 (16B) of MF Regulations, the Master Circular for
Mutual Funds dated June 27, 2024 (‘Master Circular’) has been modified as under:
Sr. Clause of the Revised Provision
No. Master Circular
A Clause 6.10.1.1 “A minimum slab wise percentage of the salary/ perks/
modified as: bonus/ non-cash compensation (gross annual CTC) net of
income tax and any statutory contributions (i.e. PF and
NPS) of the Designated Employees of the AMCs shall be
mandatorily invested in units of Mutual Fund schemes in
which they have a role/oversight. The manner for such
investments shall be as under:
Page 1 of 6
Sr. Clause of the Revised Provision
No. Master Circular
a) The slabs based on gross annual CTC shall be as under:
Slabs based on Minimum percent- Minimum percent-
gross annual age required to be age required to be
CTC invested with inclu- invested with exclu-
sion of Employee sion of ESOPs
Stock Ownership
Plan (ESOPs), if any
Option Option A Option B
Slab 0 Nil Nil
(Gross CTC be-
low 25 lakhs)
Slab 1 10% of gross an- 12.5% of gross an-
(Gross CTC nual CTC net of in- nual CTC net of in-
above 25 lakhs come tax and any come tax, any stat-
but below 50 statutory contribu- utory contributions
lakhs) tions. and ESOPs.
Slab 2 14% of gross an- 17.5% of gross an-
Gross CTC nual CTC net of in- nual CTC net of in-
above 50 lakhs come tax and any come tax, any stat-
but less than 1 statutory contribu- utory contributions
crore tions. and ESOPs.
Slab 3 (Gross 18% gross annual 22.5% of gross an-
CTC above 1 CTC net of income nual CTC net of in-
crore) tax and any statu- come tax, any stat-
tory contributions utory contributions
and ESOPs.
AMC shall have the option to adopt Option A or Option B
for its Designated Employees. Designated Employee with
no ESOP component as part of their CTC shall be covered
under Option A.
b) The slabs applicable to a Designated Employee at point (a)
above shall also be decided based on the role of the
Designated Employee in the AMC in the following manner:
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Sr. Clause of the Revised Provision
No. Master Circular
Category Employees Slab applicable
Category  Chief Executive Of- Slab applicable
A ficer (CEO) based on the CTC
 Chief Investment of the employee
Officer (CIO) as per Clause
 Fund Managers 6.10.1.1.a above.
 Investment Re-
search team
 Dealers
 Chief Risk Officer
(CRO)
 Compliance Of-
ficer
 Members of the In-
vestment Commit-
tee
Category B  Direct reportees to Slab 0 or Slab 1,
the CEO (excluding irrespective of the
Personal Assistant CTC, as decided
/ Secretary and by AMC based on
Category A em- the activity being
ployees) performed by the
 Chief Information employee. AMCs,
Security Officer while deciding
(CISO) the suitable slabs,
 Chief Operation shall ensure that
Officer (COO) the employee
 Sales Head who is directly or
 Investor Relation indirectly related
to investment
Officer(s) (IRO)
function, is con-
 Heads of depart-
sidered under
ments other than
Slab 1.
investment and
risk functions
c) For dedicated Designated Employees associated with
liquid fund schemes, Slab 1 as proposed at Clause 6.10.1.1
Page 3 of 6
Sr. Clause of the Revised Provision
No. Master Circular
(a) above shall be considered even if the Designated
Employee falls in either Slab 2 or Slab 3 based on the CTC.
For Designated Employees associated with other schemes
in addition to liquid fund scheme, Slabs based on the CTC
of the employee shall be applicable.”
B After Clause “Provided that for Designated Employees managing liquid
6.10.1.5 of the fund schemes, up to 75 percent of the minimum investment
Master Circular, amount required to be invested in liquid fund schemes may
Clause 6.10.1.5 be invested in schemes, managed by the AMC, with higher
(A) shall be risk as compared to liquid fund schemes. This shall be
inserted as: applicable for Designated Employees associated with only
liquid fund scheme and also for Designated Employees
associated with other schemes in addition to liquid fund
scheme, only with respect to the quantum required to be
invested in liquid fund schemes.
For this purpose the risk value based on the risk-o-meter of
the immediate preceding month shall be considered.”
C Clause 6.10.2.2. “In case of retirement on attaining the superannuation age as
modified as: defined in the AMC service rules, the units shall be
released from the lock-in and the Designated Employee
shall be free to redeem the units, except for the units in close
ended schemes where the units shall remain locked in till the
tenure of the scheme is over. However, on resignation or
retirement of the Designated Employee from the AMC before
attaining the age of superannuation as defined in the AMC
service rules, the lock-in period, for the investments made
under Clause 6.10 of the Master Circular, shall be reduced to
1 year from the end of the employment or completion date of
3 year lock-in period, whichever is earlier, except for the units
in close ended schemes where the units shall remain locked in
till the tenure of the scheme is over.
D Clause 6.10.2.3 “Deleted”
modified as:
E Clause 6.10.2.4. “Open Ended Schemes: After the expiry of the mandatory
modified as: lock-in period, Designated Employee can redeem their units in
open ended schemes, subject to compliance with SEBI
(Prohibition of Insider Trading) Regulations, 2015. Such
Page 4 of 6
Sr. Clause of the Revised Provision
No. Master Circular
redemption transactions shall also be subject to the
restriction on trade in closure period and the requirement of
pre-clearance from compliance officer when closure period is
not applicable, in terms of Clause 6 of Schedule B1 of SEBI
(Prohibition of Insider Trading) Regulations, 2015.
For mandatory subscription/investment in the units of mutual
funds under Clause 6.10 of the Master Circular, the
requirements specified under Clause 6 of Schedule B1 of SEBI
(Prohibition of Insider Trading) Regulations, 2015 shall not be
applicable.”
F Clause 6.10.2.5. “Deleted”
modified as:
G After Clause “In the event of violation of Code of Conduct under the MF
6.10.7.1. of the Regulations, fraud, gross negligence by Designated
Master Circular, Employees, the Nomination and Remuneration Committee of
Clause 6.10.7.2 AMC shall undertake the preliminary examination and
shall be inserted provide recommendations to SEBI for consideration, after
as: approval of the Trustees. For AMCs where the Nomination
and Remuneration Committee has not been constituted, an
equivalent body under the Board of AMC shall undertake the
preliminary examination and provide recommendations to
SEBI for consideration, after approval of the Trustees.”
H Clause 6.10.8.3. “Every scheme shall disclose the ‘compensation, in
modified as: aggregate, mandatorily invested in units for the Designated
Employees’, under the provisions of this Master Circular,
on the website of Stock Exchanges. The disclosure shall be
at quarterly aggregate level showing the total investment
across all relevant employees in a specific scheme. The
disclosure shall be made within 15 calendar days from the
end of each quarter.”
3. This circular shall come into effect from April 1, 2025.
4. This circular is issued in exercise of the powers conferred under Section 11(1) of the
Securities and Exchange Board of India Act, 1992 read with Regulation 25 (16B) and 77 of
MF Regulations, to protect the interest of investors in securities and to promote the
development of, and to regulate the securities market.
Page 5 of 6
5. This circular is available at www.sebi.gov.in under the link “Legal ->Circulars”.
Yours faithfully,
Peter Mardi
Deputy General Manager
+91-22-26449233
peterm@sebi.gov.in
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