SEBI's Stewardship Code For Mutual Funds And Alternative Investment Funds - An Analysis

1. When mutual funds and alternative investment funds invest in listed companies, should they behave like any other shareholder of such listed companies or should they act as stewards of such companies? The Securities and Exchange Board of India ("SEBI"), which regulates India's securities market as well as mutual funds and alternative investment funds, has issued a stewardship code vide its circular no. CIR/CFD/CMD1/ 168 /2019 dated December 24, 2019 ("Stewardship Code"), which imposes a number of obligations on mutual funds and alternative investment funds (hereinafter jointly referred to as "Institutional Investors"), in their role as investors in listed Indian companies. The Stewardship Code was meant to come into effect from April 1, 2020. However, vide circular number SEBI/HO/CFD/CMD1/CIR/P/2020/55 dated March 30, 2020, the date of commencement has been postponed to July 1, 2020, on account of the novel coronavirus disease pandemic.