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8. The second component of the charge of professional misconduct rests on the fact that in addition to him being incharge of equity investments funds of ACMF in his capacity as Head, Asian Emerging Markets, ACM, Singapore, he was also incharge of investment of ACM's funds in India through the FII route. SEBI found during investigations that the joint shareholding of ACMF and ACM along with its FII sub-accounts in the equity structure of some Indian companies taken together were beyond the threshold limits prescribed in SEBI (Substantial Acquisition of Shares) Regulations, 1997 and thus required proper disclosures. Since such disclosures had not been made, ACM and ACMF were considered guilty of violating the Takeover Regulations, 1997 and Shri Samir C. Arora had thus displayed unprofessional conduct because he was incharge of investments on behalf of both ACM as well as ACMF. Finally, Shri Samir C. Arora has been accused in the order as having aided and abetted the trustees and the asset management company of ACMF in violating the provisions of SEBI Mutual Funds Regulations, 1996, which inter alia prescribe a Code of Conduct for the Mutual Funds, the asset management company and the trustees. It is alleged that while managing the equity portfolios of ACMF as well as the Indian allocation of FII /sub-accounts belonging to ACM he managed the portfolio of securities in the interest of sponsors and to the detriment of the unit holders of ACMF thereby aiding and abetting the violation of Clause (1) of the Code of Conduct prescribed under the 5th Schedule of the SEBI (Mutual Funds) Regulations, 1996, by the Trustees and the asset management company of ACMF. Clause 4 of 5th Schedule of the Code of Conduct states that the Trustees and asset management companies must avoid conflict of interest in managing the affairs of the schemes and keep the interest of all unit holders paramount in all maters. In bidding for the stock of ACAML in collaboration with Henderson Global Shri Samir C. Arora is alleged to have placed himself in a position of conflict of interest thereby aiding and abetting violation of Clause 4 of the Code of Conduct by ACAML and ACM Trust Company Limited.

"I) Mutual Fund with sponsor or trustee or asset management company.

'II) Foreign Institutional Investors with sub-account(s) "For the purpose of computing the sub-limit of 5%, ACMF aggregates the holdings across all the schemes of mutual funds along with holdings of trustee company and AMC. However, it is not aware of equity holding of the FII/its sub accounts. Regulation 24(2) prohibits sharing of inside information across the various activities. Consequently, the holdings of FIIs/its sub accounts are not aggregated while computing the 5% limit for complying with the takeover code.

"AMC has requested us to clarify that the same is in compliance with the takeover code.
"Our Opinion "The query raised by the AMC has arisen since it is required to comply with provisions of Regulation 24(2) and on account of provisions of this regulation sharing of information between the mutual fund and FII sub-accounts is prohibited. However, it wants to be sure that the provisions of the takeover code do not get attracted if the aggregate holding of Mutual Fund and FIIs exceeds the trigger limits.
"We agree with the view given on the pre-page by MFD. As persons mentioned in Reg.2(1)(c)(2)(i) -(x) of Takeover Regulations cannot be 'deemed to be acting in concert' across categories, hence FIIs with sub accounts cannot be deemed to be acting in concert with Mutual Fund along with AMC's person ------ even if FII and Mutual Fund are under the same parent group.
"Submitted "-The aforesaid clarification is in order in terms of Reg. 2(1)(e)(2) of the Takeover Regulations, 1997, read with paras 2.22 and 2.23 of Bhagwati Committee Report (copy placed below) "sd/- sd/- sd/- sd/-