Independent Directors on Boards of AMCs and Trustee Companies
Summary
This circular clarifies the definition of independent directors for Asset Management Companies (AMCs) and Trustee Companies under SEBI Mutual Fund Regulations. It mandates a three-year cooling-off period for individuals ceasing to be associates before they can serve as independent directors. The document also introduces a revised bio-data format for director appointments and requires immediate reporting of non-compliance with independence ratios.
Text
Relatives of sponsor or directors of the sponsor company or relatives of associate directors of the AMCs and trustee companies shall be considered as associate directors.
The nominees of the companies who are stakeholders in the sponsor company or AMC shall be considered as associate directors.
A person who is an 'associate' cannot be appointed as independent director even after he ceases to be an 'associate' unless a cooling off period of three years has elapsed from the date of his disassociation.
The clarifications in Clauses 1-3 above shall be followed in case of directors of trustee companies and AMCs.
Please classify your existing directors... and inform us if the composition of directors does not comply with the requirement of 50% or 2/3rd independent directors... please inform us immediately and also the steps proposed to be taken by you to ensure compliance.
Regulation 18(25)(A)(i)... requires the trustees to be discerning in the appointment of the directors on the Board of the asset management company.
Under Regulations 18(27)(iii) and (v), the independent directors of the trustee or asset management company are required to pay specific attention to the selection and nomination of individuals to fill the vacancies of independent directors.
the format for sending the bio-data of directors of AMCs and trustees to SEBI has been revised and is enclosed herewith. You are advised to use this format in the future while sending the bio-data...
Source: SecMarx — Independent Directors on Boards of AMCs and Trustee Companies. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.