Sebi fixes minimum 20 investors per MF schemes

The Securities and Exchange Board of India (Sebi) has come out with stringent guidelines with regard to minimum number of investors in mutual fund (MF) scheme and exposure that can be taken by one single investor. Sebi, in a circular issued to all MFs, said all the new MF schemes coming into existence on or after the date of this circular (December 12, 2003) should have a minimum of 20 investors, and no single investor should account for more than 25 per cent of the corpus of such scheme/plan(s). However, for the existing schemes and plans of MFs, would also be required to comply with these conditions as soon as possible but not later than December 31, 2004.

Sebi also warned that in the case of non-fulfilment with either of the above two conditions a three months time period or the end of succeeding calendar quarter, whichever is earlier, from the close of the IPO of open ended schemes will be available to balance and to ensure compliance with these two conditions, failing which the provisions of Sebi MF Regulations would become applicable automatically without any reference from Sebi and accordingly, schemes /plans shall be wound up.
Meanwhile, Sebi’s Primary Markets Advisory Committee has recommended a ban on sale of promoters’ stake for a certain period prior to and after any preferential allotment of shares, if promoters participate in the said allotment.