Investment by the sponsor or asset management company in the scheme
Summary
The circular mandates that sponsors or asset management companies must invest in the growth option of a scheme, with fallback options specified if growth is unavailable. This investment requirement applies to schemes where the sponsor or AMC invests not less than one percent of the new fund offer amount or fifty lakh rupees, whichever is less. The directive was issued under Section 11(1) of the SEBI Act and Regulation 77 of the SEBI Mutual Funds Regulations to protect investor interests.
Text
the sponsor or asset management company is required to invest not less than one percent of the amount which would be raised in the new fund offer or fifty lakh rupees, whichever is less in such option of the scheme, as may be specified by the Board.
it has been decided that the above referred investment shall be made in growth option of the scheme. For such schemes where growth option is not available the investment shall be made in the dividend reinvestment option of the scheme. Further, for such schemes where growth option as well as dividend reinvestment option are not available the investment shall be made in the dividend option of the scheme.
This Circular shall come into force with immediate effect.
This circular is issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, read with the provisions of Regulation 77 of SEBI (Mutual Funds) Regulations, 1996, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
Source: SecMarx — Investment by the sponsor or asset management company in the scheme. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.