Review by 'scrutinisers' to bring transparency in MF

New Delhi: Mutual fund houses on Thursday said markets regulator Sebi's directive of taking the service of 'scrutinisers', to review the rationale behind the voting decisions made by them, will bring in greater transparency in the sector.

Certificate on voting report is now required to be obtained from the Scrutiniser instead of Auditor, according to new guidelines by Sebi.

A scrutiniser can be a practising Chartered Accountant, Cost, Company Secretary and an advocate, but not in employment of the company and is a person of repute, who can scrutinize the e-voting process in a fair and transparent manner, Quantum MF Chief Executive Jimmy Patel said.

"Sebi norms are aimed at encouraging more participation and ensuring accountability, safeguarding investors' interest. However, most MFs already have these norms internally and are keeping the regulators informed. We see it as more operational than strategic," Reliance MF CEO Sundeep Sikka said.

"Now asset management company (AMC) can obtain voting certification from other professionals who has specialised knowledge and experience in scrutinizing of voting. The move would bring in greater transparency in the mutual fund sector," Patel said.

In a circular issued yesterday, Securities and Exchange Board of India (Sebi) said: "On an annual basis, AMCs shall be required to obtain certification on the voting reports being disclosed by them. Such certification shall be obtained from a scrutiniser."

Presently, AMCs are required to obtain auditor's certification on the voting reports being disclosed by them on a quarterly basis.

"Board of AMCs and Trustees of mutual funds shall be required to review and ensure that AMCs have voted on important decisions that may affect the interest of investors and the rationale recorded for vote decision is prudent and adequate. The confirmation to the same, along with any adverse comments made by the scrutiniser, shall have to be reported to Sebi in the half yearly trustee reports," the regulator added.