Currently, Regulation 24 primarily restricts AMCs to managing and advising “pooled assets” that are “broad-based” (i.e., having at least 20 investors with no single investor holding over 25% of the corpus). The consultation paper proposes significant relaxations, primarily allowing AMCs to provide management and advisory services to non-broad-based pooled funds. To address potential conflicts such as differential fees, diversion of resources, contrary trade positions, front-running, and inter-business asset transfers, SEBI has proposed several safeguards.
— SEBI is also reviewing resource sharing between Mutual Fund operations and Portfolio Management Services (PMS) units, proposing two options: either requiring PMS activities through a distinct subsidiary with segregated key personnel or allowing PMS within the same entity but as a separate business unit with segregated key employees reporting directly to the AMC Board. The paper also explores expansion of permissible ancillary business activities, such as AMCs or their subsidiaries acting as Point of Presence (POP) for pension funds or as global distributors for funds managed or advised by the AMC outside mutual fund schemes, subject to stringent regulatory oversight and ring-fencing measures. The comments/ suggestions from stakeholders are invited.