SEBI puts in place framework for mutual fund Unit Holder Protection Committee

In order to protect unitholders’ interests in mutual fund schemes, SEBI has required asset management firms to set up a Unitholder Protection Committee by January 1, 2024.

UHPC will be responsible for protecting the interests of unitholders in mutual fund schemes vis-à-vis all products and services offered by AMC, ensuring that sound and healthy market practices are adopted in terms of investments, sales and marketing, advertising, managing conflicts of interest, correcting unitholder complaints, educating investors, and complying with laws and regulations. and other related operations with specific reference to operating a mutual fund business.

“The UHPC shall have, among other things, the following powers: To review various compliance issues related to protecting the interests of unitholders. To keep unitholders well informed and educated about mutual fund products, the investor charter, and compliant dealing procedures,” SEBI said in a prospectus.

SEBI also announced changes to the role of mutual fund trustees and allowed them to outsource a few of their responsibilities to focus on their fiduciary responsibilities. Trustees must review AMC’s performance on its charts against peer performance or appropriate standards. Trustees must ensure that AMCs have put in place appropriate systems to prevent missales to increase the assets under management and valuation of AMCs,” SEBI said.