Circular on Mutual Funds
Summary
This circular implements regulatory amendments to the SEBI Mutual Funds Regulations and modifies various existing circulars. It establishes new gross exposure limits for mutual fund schemes and updates investment pattern disclosures. The document also outlines procedures for changes in AMC control, reporting requirements, and restrictions on employee investments. This section modifies regulations regarding employee trading restrictions, permitting private equity investments subject to conflict checks and disclosure. It updates advertising standards for mutual funds, mandating specific dividend disclosures, performance presentation rules, and standardized benchmark comparisons. Additionally, it defines key personnel, clarifies performance disclosure timelines, exempts interval schemes from certain trustee certifications, and establishes procedures for updating Scheme Information Documents. This section mandates quarterly disclosure of votes cast by mutual funds on their websites and updates dividend distribution procedures including delegation powers to AMC officials. It establishes a uniform 30-day exit period for unitholders, clarifies postal ballot mechanisms, and requires truste
Text
The cumulative gross exposure through equity, debt, derivative positions (including commodity and fixed income derivatives), repo transactions and credit default swaps in corporate debt securities, Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs), other permitted securities/assets and such other securities/assets as may be permitted by the Board from time to time should not exceed 100% of the net assets of the scheme.
The tentative portfolio break-up of Equity, Debt, Money Market Instruments, other permitted securities and such other securities as may be permitted by the Board from time to time with minimum and maximum asset allocation, while retaining the option to alter the asset allocation for a short term period on defensive considerations.
No change in the control of the AMC, directly or indirectly, can be made unless prior approval of the trustees and the Board is obtained; written communication is sent to each unitholder and advertisement is given in newspapers; and unitholders are given an option to exit on the prevailing Net Asset Value (NAV) without any exit load within a time period not less than 30 calendar days.
In case the applicant proposing to take the control of an AMC is not an existing sponsor of a mutual fund registered with SEBI, it shall apply to the Board for approval of taking over control of an existing AMC under MF Regulations. The process for making such application is same as application for registration under MF Regulations.
Undertakings are required to be given to the Board and to the unitholders including taking full responsibility of management and administration, assumption of trusteeship of assets and liabilities, and assuming all responsibilities relating to investor grievances.
While seeking approval for change in control, the mutual fund handing over control must file draft letter/email and advertisement. The draft letter must include activities of new sponsor, financial track record, condensed financial information if taken over by existing MF, and details of unclaimed redemption/dividend.
The information given in all the offer documents of existing schemes shall be revised and updated pursuant to the change in control of the AMC / mutual fund. Such addendum shall also be filed with the Board.
The requirement of filing of the Monthly Cumulative Report (MCR) in physical mode stands deleted and the same shall be continued to be submitted by the AMC to the Board through email.
The format of Annual Statistical Report has been revised and shall be submitted to the Board through email only.
The annual report containing accounts of the AMC should be displayed on the websites of the mutual funds immediately after approval in Annual General Meetings within a period of four months from the date of closing of the financial year. It should also be mentioned that unitholders may request the annual report. Further, the annual report of AMCs shall be displayed on their websites in machine readable format.
Mutual funds are required to submit the Annual Information Return (AIR) under section 285 BA of the Income Tax Act, and various guidelines notified by Central Board of Direct Taxes (CBDT). Trustees or authorized persons have to report specified financial transactions through electronic medium to Income Tax Department giving PAN of the transacting parties.
Partial modification to SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2016/124 dated November, 17, 2016 regarding investment in securities by employees of AMC(s) and Trustees of Mutual Funds.
You have read the preview. Create a free account to read the full document and see every order that applied it.
Free accounts include 10 searches/day with full text access.
Source: SecMarx — Circular on Mutual Funds. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.