SEBI circular for Mutual Funds

SEBI vide its circular SEBI/IMD/CIR No 18 / 198647 /2010 dated March 15, 2010 has made amendments to the mutual funds regulations. They are summarized below:

1. A new format has been prescribed for AMC’s to disclose details of payment of brokerage or commission, if any, made to the sponsor or any of its associates, employees or their relatives.

2. ASBA facility has been extended to the investors subscribing to New Fund Offers (NFOs) of mutual fund schemes. This rule will be applicable for all NFOs launched on or after July 01, 2010.

3. In order to make NFO process efficient, the NFO period has been reduced to 15 days. This rule will also be applicable for all NFOs launched on or after July 01, 2010.

4. AMCs should disclose their general policies and procedures for exercising the voting rights in respect of shares held by them on the website of the respective AMC as well as in the annual report distributed to the unit holders from the financial year 2010-11.

5. AMCs are also required to disclose the actual exercise of their proxy votes in the AGMs/EGMs of the investee companies in respect of the certain specified matters on the website of the respective AMC as well as in the annual report distributed to the unit holders from the financial year 2010-11.

6. AMC should not collect any additional management fees for schemes launched on a no load basis in view of the SEBI’s ban on entry load.

7. AMCs should not enter into any revenue sharing arrangement with the underlying funds in any manner and should not receive any revenue by whatever means / head from the underlying fund. Any commission or brokerage received from the underlying fund should be credited into concerned scheme’s account.

A copy of the circular is available here.