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In order to protect the interests of unit holders of mutual fund schemes, SEBI has asked asset management companies to constitute a Unit Holder Protection Committee by January 1, 2024.
The UHPC shall be responsible for the protection of the interests of unit holders of mutual fund schemes vis-à-vis all products and services provided by the AMC, ensuring the adoption of sound and healthy market practices in terms of investments, sales, marketing, advertisement, management of conflicts of interests, redressal of unit holder’s grievances, investor awareness, compliance with laws and regulations, and other related processes with specific reference to the operation of the mutual fund business.
“UHPC shall, inter alia, have the following mandates: To review the various compliance issues relating to the protection of the interests of the unit holders. To keep the unit holders well informed of and educated about mutual fund products, the investor charter, and compliant handling procedures,” SEBI said in a circular.
SEBI has also announced changes in the role of mutual fund trustees and allowed them to outsource a few of their responsibilities to focus on their fiduciary responsibilities. “The Trustees shall review the performance of AMC in its schemes vis-à-vis the performance of peers or the appropriate benchmarks. The Trustees shall ensure that the AMCs have put in place adequate systems to prevent mis-selling to increase assets under their management and the valuation of the AMCs,” SEBI said.
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