Sebi cuts MF IPO process time

Mumbai, Oct 16: The Securities and Exchange Board of India Sebi has decided to bring down the time taken by mutual funds for completion ...

Mumbai, Oct 16: The Securities and Exchange Board of India Sebi has decided to bring down the time taken by mutual funds for completion of initial offer process and issue of allotted unit certificates to 60 days from the current 87 days, with a view to provide early liquidity to investors. The new norm will come into effect immediately.

Earlier, Sebi proposed to bring down the issue process period down to 42-50 days. The committee has also taken a decision on half-yearly disclosure of portfolios, treatment of unclaimed funds lying with mutual funds and instituting a code of conduct for employees, particularly with reference to self-dealing and front-running at its meeting, while deferring a decision on the structure of MFs on the lines of that existing in US.

The Committee8217;s decision to reduce the time period for the initial public offer from the present limit of a maximum of 45 days to 30 days and allotment of units and account statement within the next 30 days has raised some eyebrows.

According to industry observers, registrars and transfer agents are already finding it difficult to cope with present norm of 87 days for initial offer and allotment of units/account statement. Says Gul Tekchandani, Chief Investment Office, Sun Famp;C Asset Management: quot;It has to be seen whether registrars and transfer agents will be able to cope with all the data coming from different areas.quot;

Though the time frame given seems quite relaxed when compared to international standards,it has to see in the context of the infrastructure and the Indian market feels industry expert. There is also a feeling that the clause could prevent the mutual funds reach the rural sector. Says thechief of a mutual fund: quot;For remittance of dividend even the company8217;s law give 40 days and this is an account statement.quot;

Sources in SEBI, however, maintained that the new norms, which will be put to effect immediately, would be made mandatory only after putting it to test on 10-12 schemes. quot;If the experiment is successful, the period could be reduce further otherwise we could revert to the earlier period,quot; Sebi sources said.

It has also been decided that AMCs may start dispatching the statements of accounts once the minimum subscription amount specified in the offer document is received instead of dispatching after the closure of the issue at one time. This should reduce the workload on the AMCs.

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Meanwhile, Sebi has considered a plan to provide an integrated source of company information which would be accessible through it8217;s website, similar to that of Electronic Data Gathering and Retrieval system EDGAR system of the US Securities Exchange Commission.

The committee on web-based dissemination of corporate information set up by Sebi has been working on the modalities for setting up such a unified electronic information gathering and retrieval system, the manner and format of electronic filing information, content and periodicity is being worked out.