Sebi okays MF guidelines

MUMBAI, OCT 8: The Securities and Exchange Board of India SEBI in its board meeting here today approved a series of amendments in regul...

MUMBAI, OCT 8: The Securities and Exchange Board of India SEBI in its board meeting here today approved a series of amendments in regulations and guidelines related to mutual funds operations and asset management companies AMCs.

Succumbing to several requests from mutual funds industry, the board allowed the AMCs to carry out portfolio management activities subject to certain conditions.

The board decided that a mutual fund should not invest more than 25 per cent of net asset value NAV of its schemes in the listed securities of group companies of the sponsor instead of the present requirement of 25 per cent of NAV of all the schemes put together.

It also restricted the mutual funds investment to 10 per cent of the NAV of a scheme in the equity shares or equity-related instruments of a single company. However, the limit of 10 per cent will not be applicable in case of index funds and in case of sector or industry specific schemes subject to adequate disclosures in the offer documents.

The investment in rated debt instruments issued by a single issuer to 15 per cent of NAV of the scheme and this limit may be extended to 20 per cent of the NAV of the scheme with the prior approval of the board of AMC and board of trustees.

In the case of unrated and below investment grade debt instruments, the mutual fund investment in a single issuer should not exceed 10 per cent of the NAV of the scheme and in case of such debt instruments of all the issuers in a scheme would not exceed 25 per cent of NAV subject to approval of boards of AMC and trustee company. However, such restrictions will not be made applicable to government securities and money market instruments, Mehta said at a press conference.

SEBI decided to restrict the investment in unlisted shares to a maximum of 10 per cent of the NAV of a scheme in case of close-ended scheme and in case of open-ended schemes the limit may be made more stringent to 5 per cent of the NAV of the scheme as there is a continuous repurchase by investors in such schemes.

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In case of any change in control and fundamental attributes of open-ended schemes, the unitholders should be informed by way of individual communication and through public notice so that unitholders are given option to exit at the prevailing NAV without any exit load. However, no such change shall be allowed for a period of one year from the date of allotment of units.

Besides, SEBI also amended some regulations related the code of conduct of AMC and the trustees and also advertisement code related to the performance of funds.