sebi: Sebi amends rules for portfolio managers’ investments in ‘associates’ – Blue Barrows

Markets regulator Sebi on Friday said portfolio managers can invest a maximum of 30% of clients’ assets in the securities of their ‘associates’ or related parties.

This came after Sebi amended portfolio managers’ rules on Monday that mandated prudential limits on investments in associates and related parties of portfolio managers, the requirement of taking prior consent of clients for such investments and restrictions based on the credit rating of securities.

The regulator defined “associate” as a body corporate in which a director or partner of the portfolio manager holds, either individually or collectively, more than 20% of its paid-up equity share capital or partnership interest.

In a circular, the Sebi said “portfolio managers shall invest up to a maximum of 30% of their client’s portfolio (as a percentage of the client’s assets under management) in the securities of their own associates/related parties.”

With regard to investment in equity, debt and hybrid securities, the regulator has fixed a limit of 15% each for investment in a single associate or related party, while the same has been set at 25% for investment across multiple associates or related parties.