SEBI introduces Stewardship Code for all mutual funds and AIFs in relation to investment in listed entities

Dec 27, 2019 | by Avantis RegTech Legal Research Team


Industry Specific Compliance

The Securities and Exchange Board of India (SEBI) on December 24, 2019, introduces the Stewardship Code for all Mutual Funds and all categories of Alternative Investment Funds (AIFs), in relation to their investment in listed equities. SEBI along with Insurance Regulatory and Development Authority of India (IRDAI) and Pension Fund Regulatory and Development Authority (PFRDA) has examined the introduction of stewardship principles in India, which was approved by a sub-committee of the Financial Stability and Development Council (FSDC-SC). The importance of institutional investors in capital markets across the world is increasing the world over, thus SEBI has decided that all Mutual Funds and all categories of AIFs shall mandatorily follow the Stewardship Code in relation to their investment in listed equities under the SEBI Act, 1992 read with the provisions of SEBI (Mutual Funds) Regulations, 1996 and SEBI (Alternative Investment Funds) Regulations, 2012.

The followings are the principles of the Stewardship Code:-

1. Institutional Investors should formulate a comprehensive policy on the discharge of their stewardship responsibilities, publicly disclose it, review and update it periodically.

2. Institutional investors should have a clear policy on how they manage conflicts of interest in fulfilling their stewardship responsibilities and publicly disclose it.

3. Institutional investors should monitor their investee companies.

4. Institutional investors should have a clear policy on intervention in their investee companies. Institutional investors should also have a clear policy for collaboration with other institutional investors where required, to preserve the interests of the ultimate investors, which should be disclosed.

5. Institutional investors should have a clear policy on voting and disclosure of voting activity.

6. Institutional investors should report periodically on their stewardship activities.

The Stewardship Code shall come into effect from the Financial Year beginning April 01, 2020.

[SEBI Circular No. CIR/CFD/CMD1/168/2019]


Bookmark

Related Updates



Alternate Text

Get updates on the go on RuleZbook Mobile App.