SECURITIES AND EXCHANGE BOARD OF INDIA (MUTUAL FUNDS) REGULATIONS, 1996
1(1) These regulations may be called the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.
(2) They shall come into force on the date of their publication in the Official Gazette.
1.Inserted vide SEBI(Mutual Fund) Amendment Regulations, 1998 , S.O.No:32(E) dated January 12, 1998
2. In these regulations, unless the context otherwise requires:-
(a) "Act" means the Securities and Exchange Board of India, Act 1992 , (15 of 1992);
(b) "advertisement" includes every form of advertising, whether in a publication, by display of notices, signs, labels or by means of circulars, catalogues or other documents, by an exhibition of pictures or photographic films, by way of sound broadcasting or television, or in any other manner;
(c) "associate" includes a person -
(i) who directly or indirectly, by himself, or in combination with relatives, exercises control over the asset management company or the trustee as the case may be, or
(ii) in respect of whom the asset management company or the
An application for registration of a mutual fund shall be made to the Board in Form A by the sponsor
Every application for registration under regulation 3 shall be accompanied by non-refundable application fee as specified in the Second Schedule.
An application, which is not complete in all respects shall be liable to be rejected.
Provided that, before rejecting any such application, the applicant shall be given an opportunity to complete such formalities within such time as may be specified by the Board.
The Board may require the sponsor to furnish such further information or clarification as may be required by it.
For the purpose of grant of a certificate of registration, the applicant has to fulfill the following, namely:-
(a) the sponsor should have a sound track record and general reputation of fairness and integrity in all his business transactions;
Explanation: For the purposes of this clause "sound track record" shall mean the
sponsor should,-
(i) be carrying on business in financial services for a period of not less than five years; and
ii. the networth is positive in all the immediately preceding five years; and
iii. the networth in the immediately preceding year is more than the capital contribution of the sponsor in the asset management company; and
7A. The provisions of the Securities and Exchange Board of India (Criteria for fit and proper person) Regulations, 2004 shall, as for as may be, apply to all applicants or the mutual funds under these regulations.]
8. The Board, may on receipt of all information decide the application.
9. The Board may register the mutual fund and grant a certificate in Form B on the
applicant paying the registration fee as specified in Second Schedule.
10. The registration granted to a mutual fund under regulation 9, shall be subject to the following terms and conditions:-
(a) the trustees, the sponsor, the asset management company and the custodian shall comply with the provisions of these regulations;
(b) the mutual fund shall forthwith inform the Board, if any information or particulars previously submitted to the Board was misleading or false in any material respect;
(c) the mutual fund shall forthwith inform the Board, of any material change in the information or particulars previously furnished, which have a bearing on the registration granted by it;
(d) payment of fees as specified in the regulations and the Second Schedule.
11. Where the sponsor does not satisfy the eligibility criteria mentioned in regulation 7, the Board may reject the application and inform the applicant of the same.
A mutual fund shall pay before the 15th April each year a 4[annual fee] as specified in the Second Schedule for every financial year from the year following the year of registration.
Provided that the Board may, on being satisfied with the reasons for the delay permit the mutual fund to pay the 4[annual fee] at any time before the expiry of two months from the commencement of the financial year to which such fee relates.
4.Substituted for the words "service fee" by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2006 w.e.f. 03.08.2006
The Board may not permit a mutual fund who has not paid 4[annual fee] to launch any scheme.
A mutual fund shall be constituted in the form of a trust and the instrument of trust shall be in the form of a deed, duly registered under the provisions of the Indian Registration Act, 1908 (16 of 1908) executed by the sponsor in favour of the trustees named in such an instrument.
(1) The trust deed shall contain such clauses as are mentioned in the Third Schedule and such other clauses which are necessary for safeguarding the interests of the unit holders.
(2) No trust deed shall contain a clause which has the effect of-
(i) limiting or extinguishing the obligations and liabilities of the trust in relation to any mutual fund or the unit holders; or
(ii) indemnifying the trustees or the asset management company for loss or damage caused to the unit holders by their acts of negligence or acts of commissions or omissions.
16.(1) A mutual fund shall appoint trustees in accordance with these regulations.
(2) No person shall be eligible to be appointed as a trustee unless -
(a) he is a person of ability, integrity and standing; and
(b) has not been found guilty of moral turpitude; and
(c) has not been convicted of any economic offence or violation of any securities laws; and
(d) has furnished particulars as specified in Form C.
11[(3) No asset management company and no director (including independent director), officer or employee of an asset management company shall be eligible to be appointed as a trustee of any mutual fund.
(4)
(1) No trustee shall initially or any time thereafter be appointed without prior
approval of the Board.
[Proviso to Regulation deleted]2
(2) The existing trustees of any mutual fund may form a trustee company to act as a trustee with the prior approval of the Board.
2. Vide SEBI (Mutual Fund) Amendment Regulations, 1998 , S.O.No:32(E) dated January 12, 1998
.(1) The trustees and the asset management company shall with the prior approval of the Board enter into an investment management agreement.
(2) The investment management agreement shall contain such clauses as are mentioned in the Fourth Schedule and such other clauses as are necessary for the purpose of making investments.
(3) The trustees shall have a right to obtain from the asset management company such information as is considered necessary by the trustees.
(4) The trustees shall ensure before the launch of any scheme that the asset management company has;-
(a) systems in place for its back office, dealing room and accounting;
(b) appointed all key personnel including fund manager(s) for the s
(1) The application for the approval of the asset management company shall be made in Form D.
(2) The provisions of regulations 5, 6 and 8 shall, so far as may be, apply to the application made under sub-regulation (1) as they apply to the application for registration of a mutual fund.
(1) The sponsor or, if so authorised by the trust deed, the trustee shall, appoint an asset management company, which has been approved by the Board under sub-regulation (2) of regulation 21.
(2) The appointment of an asset management company can be terminated by majority of the trustees or by seventy five per cent of the unit-holders of the scheme.
(3) Any change in the appointment of the asset management company shall be subject to prior approval of the Board and the unitholders.
(1) For grant of approval of the asset management company the applicant has to fulfill the following: -
(a) in case the asset management company is an existing asset management company it has a sound track record, general reputation and fairness in transactions;
Explanation: For the purpose of this clause sound track record shall mean the networth and the profitability of the asset management company.
(aa) the asset management company is a fit and proper person.1
(b) the directors of the asset management company are persons having adequate professional experience in finance and financial services related field and not found guilty of moral turpitude or convicted of any economic offence or violation of any securities laws;
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The approval granted under sub-regulation (2) of regulation 21 shall be subject to the following conditions, namely :-
(a) any director of the asset management company shall not hold the office of the director in another asset management company unless such person is an independent director referred to in clause (d) of sub-regulation (1) of regulation 21 and approval of the board of asset management company of which such person is a director, has been obtained;
(b) the asset management company shall forthwith inform the Board of any material change in the information or particulars previously furnished, which have a bearing on the approval granted by it;
(c) no appointment of a director of an asset management company shall be made without prior approval of the trustees;
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Where an application made under regulation 19 for grant of approval does not satisfy the eligibility criteria laid down in regulation 21, the Board may reject the application.
The asset management company shall, -
(a) not act as a trustee of any mutual fund;
(b) not undertake any business activities other than in the nature of management and advisory services provided to pooled assets including offshore funds, insurance funds, pension funds, provident funds, if any of such activities are not in conflict with the activities of the mutual fund :
Provided that the asset management company may itself or through its subsidiaries undertake such activities, as permitted under clause (b), if,
(i) it satisfies the Board that bank and securities accounts are segregated activity wise;
(ii) it meets with the capital adequacy requirements, if any, separately for each such activity and obtai
(1) The asset management company shall take all reasonable steps and exercise due diligence to ensure that the investment of funds pertaining to any scheme is not contrary to the provisions of these regulations and the trust deed.
(2) The asset management company shall exercise due diligence and care in all its investment decisions as would be exercised by other persons engaged in the same business.
20[(2A) The asset management company shall obtain, wherever required under these regulations, prior in-principle approval from the recognised stock exchange(s) where units are proposed to be listed.]
(3) The asset management company shall be responsible for the acts of commissions or omissions by its employees or the persons whose services have been procured by the asset management company.
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(1) The mutual fund shall appoint a custodian to carry out the custodial services for the schemes of the fund and sent intimation of the same to the Board within fifteen days of the appointment of the custodian.
18[Provided that in case of a gold exchange traded fund scheme, the assets of the scheme being gold or gold related instruments may be kept in custody of a bank which is registered as a custodian with the Board.]
19[Provided further that in case of a real estate mutual fund scheme, the title deed of real estate assets held by it may be kept in the custody of a custodian registered with the Board.]
(2) No custodian in which the sponsor or its associates hold 50% or more of the voting rights of the share capital of the custodian or where 50% or more of the directors of the custodian r
The mutual fund shall enter into a custodian agreement with the custodian, which shall contain the clauses which are necessary for the efficient and orderly conduct of the affairs of the custodian.
Provided that the agreement, the service contract, terms and appointment of the custodian shall be entered into with the prior approval of the trustees.
(1) No scheme shall be launched by the asset management company unless such scheme is approved by the trustees and a copy of the offer document has been filed with the Board.
14[(2) The mutual fund shall pay the minimum filing fee specified in the Second Schedule to the Board while filing the offer document under sub-regulation (1).
(3) The mutual fund shall pay the balance filing fee calculated in accordance with the Second Schedule to the Board within such time as may be specified by the Board.]
14. Inserted by SEBI (Mutual Fund) (Second Amdt.) Regulations, 2006,notified vide S.O. 783(E) dated May 22, 2006.
(1) The offer document shall contain disclosures which are adequate in order to enable the investors to make informed investment decision [including the disclosure on maximum investments proposed to be made by the scheme in the listed securities of the group companies of the sponsor].1
(2) The Board may in the interest of investors require the asset management company to carry out such modifications in the offer document as it deems fit.
(3) In case no modifications are suggested by the Board in the offer document within 21 [working]2 days from the date of filing, the asset management company may issue the offer document.
3[(4) No one shall issue any form of application for units of a mutual fund unless the form is accompanied by the memorandum containing such information as may be specifie
(1) The asset management company shall provide an option to the unit holder to nominate, in the manner as specified in Fourth Schedule, a person in whom the units held by him shall vest in the event of his death.
(2) Where the units are held by more than one person jointly, the joint unit holders may together nominate a person in whom all the rights in the units vest in the event of death of all joint unit holders.]
12. Inserted vide SEBI (Mutual Fund) Amendment Regulations, 1998,notified vide S.O. 32 (E) dated January 12, 1998.
(1) Advertisements in respect of every scheme shall be in conformity with the Advertisement Code as specified in the Sixth Schedule and shall be submitted to the Board within 7 days from the date of issue.
(2) The advertisement for each scheme shall disclose [investment objective for each scheme]4
4. Substituted for the words "in addition to the investment objective, the method and periodicity or valuation of the investment, the method and periodicity of sales and repurchases" vide SEBI (Mutual Fund) Amendment Regulations, 1998,notified vide S.O. 32 (E) dated January 12, 1998.
The offer document and advertisement materials shall not be misleading or contain any statement or opinion which are incorrect or false.
Every close ended scheme, other than an equity linked savings scheme, shall be listed on a recognised stock exchange within such time period and subject to such conditions as specified by the Board:
Provided that listing of close ended scheme launched prior to the commencement of the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2009 shall not be mandatory --
(a) if the said scheme provides for periodic repurchase facility to all the unit holders with restriction, if any, on the extent of such repurchase;
or (b) if the said scheme provides for monthly income or caters to special classes of persons like senior citizens, women, children, widows or physically handicapped or any special class of persons providing for repurchase of units at regular intervals; or
20[(1) Units of a close ended scheme, other than those of an equity linked savings scheme, launched on or after the commencement of the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2009 shall not be repurchased before the end of maturity period of such scheme.]
(2) The units of close ended schemes referred to in the proviso to regulation 32 may be open for sale or redemption at fixed pre-determined intervals if the maximum and minimum amount of sale or redemption of the units and the periodicity of such sale or redemption have been disclosed in the offer document. [words "without listing" deleted]31
21[***]
(3) The units of close ended scheme may be converted into open ended scheme,-
(a) if the offer document of
No scheme of a mutual fund other than the 9[initial] offering period of any equity linked savings schemes shall be open for subscription for more than 24[fifteen days].
9. Vide SEBI (Mutual Fund) Amendment Regulations, 1998,notified vide S.O. 32 (E) dated January 12, 1998.
24. Substituted by the Securities And Exchange Board Of India (Mutual Funds) (Amendment) Regulations, 2010 vide Notification No. LAD-NRO/GN/2010-11/13/13945 dated 29.07.2010 for the following : -"45 days"
(1) The asset management company shall specify in the offer document, -
(a) the minimum subscription amount it seeks to raise under the scheme; and
(b) in case of over subscription the extent of subscription it may retain.
Provided that where the asset management company retains the over subscription referred to in clause (b), all the applicants applying upto five thousand units shall be given full allotment subject to the over subscription mentioned in clause (b).
(2) The mutual fund and asset management company shall be liable to refund the application money to the applicants,-
(i) if the mutual fund fails to receive the minimum subscription amount referred to in clause (a) of sub-regulation (1); <
(1) The asset management company shall issue to the applicant whose application has been accepted, a statement of accounts specifying the number of units allotted to the applicant as soon as possible but not later than 26[five working days] from the date of closure of the initial subscription list and/or from the date of receipt of the request from the unitholders in any open ended scheme:
Provided that if an applicant so desires, the asset management company shall issue the unit certificates to the applicant within 26[five working days] of the receipt of request for the certificate.
(2) An applicant in a close ended scheme whose application has been accepted shall have the option either to receive the statement of accounts or to hold units in dematerialised form and the asset management company shall issue to such applicant, a statement
(1) 23[An unit] unless otherwise restricted or prohibited under the scheme, shall be freely transferable by act of parties or by operation of law.
18[(1A) A unitholder, in a close ended scheme listed on a recognised stock exchange, who desires to trade in units shall hold units in dematerialised form.]
(2) The asset management company shall, on production of instrument of transfer together with relevant unit certificates, register the transfer and return the unit certificate to the transferee within thirty days from the date of such production.
Provided that if the units are with the depository such units will be transferable in accordance with the provisions of the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996.
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No guaranteed return shall be provided in a scheme, -
(a) unless such returns are fully guaranteed by the sponsor or the asset management company;
(b) unless a statement indicating the name of the person who will guarantee the return, is made in the offer document;
(c) the manner in which the guarantee to be met has been stated in the offer document.
A capital protection oriented scheme may be launched, subject to the following:
(a) the units of the scheme are rated by a registered credit rating agency from the viewpoint of the ability of its portfolio structure to attain protection of the capital invested therein;
(b) the scheme is close ended; and
(c) there is compliance with such other requirements as may be specified by the Board in this behalf.]
16. Inserted by the Securities and Exchange Board of India (Mutual Funds) (Third Amendment) Regulations, 2006, dated 03. 08.2006
(1) A close-ended scheme shall be wound up on the expiry of duration fixed in the scheme on the redemption of the units unless it is rolled-over for a further period under sub-regulation (4) of regulation 33.
(2) A scheme of a mutual fund may be wound up, after repaying the amount due to the unitholders,-
(a) on the happening of any event which, in the opinion of the trustees, requires the scheme to be wound up; or
(b) if seventy five per cent of the unit holders of a scheme pass a resolution that the scheme be wound up; or
(c) if the Board so directs in the interest of the unit-holders.
(3) Where a scheme is to be wound up under [words "sub-regulation (1) or" deleted]11 sub-regulation (2), the trust
On and from the date of the publication of notice under clause (b) of sub-regulation (3) of regulation 39, the trustee or the asset management company as the case may be, shall-
(a) cease to carry on any business activities in respect of the scheme so wound up;
(b) cease to create or cancel units in the scheme;
(c) cease to issue or redeem units in the scheme.
(1) The trustee shall call a meeting of the unit holders to approve by simple majority of the unit holders present and voting at the meeting resolution for authorising the trustees or any other person to take steps for winding up of the scheme.
Provided that a meeting of the unit holders shall not be necessary if the scheme is wound up at the end of maturity period of the scheme.
(2) (a) The trustee or the person authorised under sub-regulation (1) shall dispose of the assets of the scheme concerned in the best interest of the unit holders of that scheme.
(b) The proceeds of sale realised under clause (a), shall be first utilised towards discharge of such liabilities as are due and payable under the scheme and after making appropriate provision for meeting the expenses connected with su
After the receipt of the report under sub-regulation (3) of Regulation 41, if the Board is satisfied that all measures for winding up of the scheme have been complied with, the scheme shall cease to exist.
The units of a mutual fund scheme shall be delisted from a recognised stock exchange in accordance with the guidelines as may be specified by the Board.]
18. Inserted by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2009 vide Notification No : LAD-NRO/GN/2009-10/01/159601 dated 08.04.2009.
(1) Subject to other provisions of these regulations, a mutual fund may invest moneys collected under any of its schemes only in -
(a) securities;
(b) money market instruments;
(c) privately placed debentures;
(d) securitised debt instruments, which are either asset backed or mortgage backed securities; 10[***]
(e) gold or gold related instruments 11[; or]
12[(f) real estate assets as defined in clause (a) of regulation 49A 18[; or]]
19[(g) infrastructure debt instrument and assets as specified in clause (1) of regulation 49L.]
(2) Any investment made under sub-regulation
(1) Any investments to be made under regulation 43 shall be invested subject to the investment restriction specified in the Seventh Schedule.
7[Provided that nothing in the Seventh Schedule shall apply to a gold exchange traded fund scheme.]
[(1A) The mutual fund having an aggregate of securities which are worth Rs.10 crores or more, as on the latest balance sheet date, shall subject to such instructions as may be issued from time to time by the Board settle their transactions entered on or after January 15, 1998 only through dematerialised securities.]2
(2) The mutual fund shall not borrow except to meet temporary liquidity needs of the mutual funds for the purpose of repurchase, redemption of units or payment of interest or dividend to the unit holders.
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The funds of a scheme shall not in any manner be used in option trading or in short selling or carry forward transactions.
8[Provided that a mutual fund may enter into derivatives transactions in a recognised stock exchange, subject to such Guidelines as may be specified by the Board.]
8. Substituted by SEBI (Mutual Funds) (Second Amendment) Regulations, 2006, notified by SO783(E) dated 22.05.2006 for the following:
4[Provided that mutual funds shall enter into derivatives transactions in a recognised stock exchange for the purpose of hedging and portfolio balancing, in accordance with the guidelines issued by the Board].
4. Inserted by SEBI (Mutual Fund) Amendment Regulations, 1999 vide Gazette Notification S.O. No: 1223 (E) dated December 8, 1999
Mutual funds may enter into underwriting agreement after obtaining a certificate of registration in terms of the Securities and Exchange Board of India (Underwriters) Rules and Securities and Exchange Board of India (Underwriters) Regulations, 1993 authorising it to carry on activities as underwriters.
Explanation:(1) For the purpose of these regulations, the underwriting obligation will be deemed as if investments are made in such securities.
(2) The capital adequacy norms for the purpose of underwriting shall be the net asset of the scheme.
Provided that the underwriting obligation of a mutual fund shall not at any time exceed the total net asset value of the scheme.
Every mutual fund shall compute and carry out valuation of its investments in its portfolio and publish the same in accordance with the valuation norms specified in Eighth Schedule.
(1) Every mutual fund shall compute the Net Asset Value of each scheme by dividing the net assets of the scheme by the number of units outstanding on the valuation date.
(2) The Net Asset Value of the scheme shall be calculated and published at least in two daily newspapers at intervals of not exceeding one week:
16[Provided that the Net Asset Value of a close ended scheme, other than that of equity linked savings scheme, shall be calculated on daily basis and published in at least two daily newspapers having circulation all over India.]
16. Substituted by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations 2009 vide Notification No : LAD-NRO/GN/2009-10/01/159601 dated 08.04.2009 for the following : -
"Provided that t
(1) The price at which the units may be subscribed or sold and the price at which such units may at any time be repurchased by the mutual fund shall be made available to the investors.
(2) The mutual fund, in case of open ended scheme, shall at least once a week publish in a daily newspaper of all India circulation, the sale and repurchase price of units.
(3) While determining the prices of the units, the mutual fund shall ensure that the repurchase price is not lower than 93% of the Net Asset Value and the sale price is not higher than 107% of the Net Asset Value.
Provided that the repurchase price of the units of a close ended scheme shall not be lower than 95% of the Net Asset Value:
Provided further that the difference between the repurchase
For the purposes of this Chapter, unless the context otherwise requires-
(a) real estate asset means an identifiable immovable property-
(i) which is located within India in such city as may be specified by the Board from time to time or in a special economic zone within the meaning of clause (za) of section 2 of the Special Economic Zones Act, 2005 (28 of 2005);
(ii) on which construction is complete and which is usable;
(iii) which is evidenced by valid title documents;
(iv) which is legally transferable;
(v) which is free from all encumbrances;
(vi) which is not subject matter of any litigation;
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(1) The provisions of this Chapter shall apply to real estate mutual fund schemes.
(2) Unless the context otherwise requires, all other provisions of these regulations and the guidelines and circulars issues thereunder shall apply to real estate mutual fund schemes, and trustees and asset management companies in relation to such schemes, except where specific provisions are made in relation thereto under this Chapter.
(1) A Certificate of registration may be granted under regulation 9 to an applicant proposing to launch only real estate mutual fund schemes if he;-
(a) has been carrying on business in real estate for a period of not less than five years;
(b) fulfills eligibility criteria provided in regulation 7, except that specified in item (i) of the Explanation to clause (a) thereof:
(2) A real estate mutual fund scheme of a mutual fund registered under sub-regulation (1) shall not invest in the securities mentioned in sub-clauses (ii) to (iii) of clause (a) or in clause (b) of sub-regulation (2) of regulation 49E unless it has key personnel having adequate professional experience in finance and financial services related field.
(3) An existing mutual fund may
(1) Every real estate mutual fund scheme shall be close-ended and its units shall be listed on a recognized stock exchange: Provided that the redemption of a real estate mutual fund scheme may be done in a staggered manner.
(2) The units issued by a real estate mutual fund scheme shall not confer any right on the unit holders to use the real estate assets held by the scheme and any provision to the contrary in the trust deed or in the terms of issue shall be void.
(3) The title deeds pertaining to real estate assets held by a real estate mutual fund scheme shall be kept in safe custody with the custodian of the mutual fund.
(4) A real estate mutual fund scheme shall not undertake lending or housing finance activities.
(5) All financial transactions
(1) Every real state mutual fund scheme shall invest at least thirty five per cent. of the net assets of the scheme directly in real estate assets.
(2) Subject to sub-regulation (1), every real estate mutual fund scheme shall invest-
(a) at least seventy five per cent. of the net assets of the scheme in-
(i) real estate assets;
(ii) mortgage backed securities (but not directly in mortgages);
(iii) equity shares or debentures of companies engaged in dealing in real estate assets or in undertaking real estate development projects, whether listed on a recognized stock exchange in India or not;
(b) the balance in other securities;
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(1) The real estate assets held by a real estate mutual fund scheme shall be valued
(a) at cost price on the date of acquisition; and
(b) at fair price on every ninetieth day from the day of its purchase. in accordance with the norms specified in Schedule IXB.
(2) The asset management company, its directors, the trustees and the real estate valuer shall ensure that the valuation of assets held by a real estate mutual fund scheme are done in good faith, in accordance with the norms specified in Schedule IX B and that the accounts of the scheme are prepared in accordance with accounting principles specified in Schedule XI.
(3) The net asset value of every real estate mutual fund scheme shall be calculated and declared at the close of each business d
(1) Without prejudice to the provisions of regulation 21, the asset management company of a mutual fund having real estate mutual fund schemes shall appoint suitable number of qualified key personnel with relevant experience, before undertaking investment management of real estate assets of a real estate mutual fund scheme.
(2) The asset management company may appoint advisors to advise it on acquisitions or proposed acquisitions of real estate assets.
(3) The asset management company shall exercise due care while appointing real estate valuers for valuing the real estate assets held by the real estate mutual fund scheme and shall ensure that there is no conflict of interest.
(4) The asset management company shall lay down an adequate system of internal controls and risk management.
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(1)The asset management company may let out or lease out the real estate assets held by the real estate mutual fund scheme if the term of such lease or letting does not extend beyond the period of maturity of the scheme.
(2) Where real estate assets are let out or leased out, the asset management company shall diligently collect the rents or other income in a timely manner.
(3) Real estate assets held by a real estate mutual fund scheme may be let out to the sponsor, asset management company or any of their associates, at market price or otherwise on commercial terms:
Provided that not more than 25% of the total rental income of the scheme shall be derived from assets so let out.
The trustees shall ensure that the asset management company has the necessary expertise, internal control systems and risk management mechanism to invest in and manage investments in real estate assets on a continuous basis.
(2) The trustees shall monitor whether due diligence is exercised by the asset management company in managing the investments.
(3) The trustees shall review the market price of the units during the year and shall recommend proportionate buy back of units from unit holders, if the units are traded at steep discount to the net asset value.
(4) The magnitude of discount which shall amount to steep discount referred to in sub-regulation (3) shall be disclosed in the offer document.
(5) The trustees shall ensure that only permissible
(1) The offer documents of real estate mutual fund schemes shall contain disclosures which are adequate for investors to make informed investment decisions and such further disclosures as may be specified by the Board.
(2) The portfolio disclosures and financial results in respect of a real estate mutual fund scheme shall contain such further disclosures as are specified by the Board.
(3) Advertisements in respect of real estate mutual fund schemes shall conform to such guidelines as may be specified by the Board.
(1) All transactions done by the trustees or the employees or directors of the asset management company or the trustee company in real estate assets shall be disclosed by them to the compliance officer within one month of the transaction.
(2) The compliance officer shall make a report thereon from the view point of possible conflict of interest and shall submit it to the trustees with his recommendations, if any.
(3)The persons covered in sub-regulation (1) may obtain the views of the trustees before entering into the transaction in real estate assets, by making a suitable request to them
(1) Every asset management company for each scheme shall keep and maintain proper books of accounts, records and documents, for each scheme so as to explain its transactions and to disclose at any point of time the financial position of each scheme and in particular give a true and fair view of the state of affairs of the fund and intimate to the Board the place where such books of accounts, records and documents are maintained.
(2) Every asset management company shall maintain and preserve for a period of eight1 years its books of accounts, records and documents.
(3) The asset management company shall follow the accounting policies and standards as specified in Ninth Schedule so as to provide appropriate details of the schemewise disposition of the assets of the fund at the relevant accounting date and the performance during that peri
The financial year for all the schemes shall end as of March 31 of each year.
Provided that, for a new scheme commenced during a financial year, the disclosure and reporting requirements would apply for the period beginning from the date of its commencement and ending on March 31st of the [that financial year]2.
2. Substituted for the words "following year" vide SEBI (Mutual Fund) Amendment Regulations, 1998,notified vide S.O. 32 (E) dated January 12, 1998.
(1) All expenses should be clearly identified and appropriated in the individual schemes.
(2) The Asset Management Company may charge the mutual fund with investment and advisory fees which are fully disclosed in the offer document subject to the following namely:-
(i) One and a quarter of one per cent of the weekly average net assets outstanding in each accounting year for the scheme concerned, as long as the net assets do not exceed Rs.100 crores, and
(ii) One per cent of the excess amount over Rs.100 crores, where net assets so calculated exceed Rs.100 crores.
(3) 39[***]
(4) In addition to the fees mentioned in sub regulation (2), the asset management company may charge the mutual fund with the f
A mutual fund may declare dividends in accordance with the offer document and subject to such Guidelines as may be specified by the Board.]
27. Inserted by SEBI (Mutual Fund) (Second Amdt.) Regulations, 2006,notified vide S.O. 783(E) dated May 22, 2006.
Every mutual fund and asset management company shall,
(a) despatch to the unitholders the dividend warrants within 16[30 days] of the declaration of the dividend.
(b) despatch the redemption or repurchase proceeds within 10 working days from the date of redemption or repurchase.
[(c) In the event of failure to dispatch the redemption or repurchase proceeds within the period specified in sub-clause (b), the asset management company shall be liable to pay interest to the unitholders at such rate as may be specified by Board for the period of such delay.
(d) Notwithstanding payment of such interest to the unitholders under sub-clause (c), the asset management company may be liable for penalty for failure to despatch the redemption or repurchase pro
Every mutual fund or the asset management company shall prepare in respect of each financial year an annual report and annual statement of accounts of the schemes and the fund as specified in Eleventh Schedule.
(1) Every mutual fund shall have the annual statement of accounts audited by an auditor who is not in any way associated with the auditor of the asset management company.
Explanation: For the purposes of this sub-regulation and regulation 66 "auditor" means a person who is qualified to audit the accounts of a company under section 224 of the Companies Act, 1956 (1 of 1956).
(2) An auditor shall be appointed by the trustees.
(3) The auditor shall forward his report to the trustees and such report shall form part of the Annual Report of the mutual fund.
(4) The auditor's report shall comprise of the following:-
(a) a certificate to the effect that:-
(i) he
(1) The scheme wise Annual Report of a mutual fund or an abridged summary thereof 20[***] 10[shall be mailed to all unitholders] as soon as may be but not later than 32,34[four months] from the date of closure of the relevant accounts year 41[:]
42[Provided that the scheme wise annual report or abridged summary thereof may be sent to investors in electronic form on their registered e-mail address in the manner specified by the Board.]
(2) The Annual Report and abridged summary thereof shall contain details as specified in the Eleventh Schedule and such other details as are necessary for the purpose of providing a true and fair view of the operations of the mutual fund.
33,35[Provided that the abridged scheme wise Annual Report mailed to the unit holders is in the format prescribed by the Boar
Every mutual fund [***]13 shall within 32,34[four months] from the date of closure of each financial year forward to the Board a copy of the Annual Report and other information including details of investments and deposits held by the mutual fund so that the entire schemewise portfolio of the mutual funds is disclosed to the Board.
13. The words "and asset management company" deleted vide SEBI (Mutual Fund) Amendment Regulations, 1998,notified vide S.O. 32 (E) dated January 12, 1998.
32. Substituted by the Securities and Exchange Board of India (Mutual Funds) (Third Amendment) Regulations, 2008 vide Notification No. LAD-NRO/GN/2008/24/139426 dated 29.09.2008 for the words "six months".
34. Substituted by the Securities and Exchange Board of India (Mutual Funds) (Third Amendment) Regulations, 2008 vide Circular No. SEBI/IMD/CIR No. 10
(1) The mutual fund, the asset management company, the trustee, custodian, sponsor of the mutual fund shall make such disclosures or submit such documents as they may be called upon to do so by the Board.
(2) Without prejudice to the generality of sub-regulation (1), the mutual fund [***]14 shall furnish the following periodic reports to the Board namely :-
(a) copies of the duly audited annual statements of accounts including the balance sheet and the profit and loss account for the fund and in respect of each scheme, once a year;
(b) a copy of six monthly unaudited accounts;
(c) a quarterly statement of movements in net assets for each of the schemes of the fund;
(d) a quarterly portfolio statement
A mutual fund and asset management company shall before the expiry of 17[one months] from the close of each half year that is on 31st March and on 30th September, publish its unaudited financial results in one English daily newspaper circulating in the whole of India and in a newspaper published in the language of the region where the Head Office of the mutual fund is situated. 18[The half yearly results must be printed in at least 7 point. Times new Roman font with proper spacing for easy reading]
Provided that the half-yearly unaudited report referred in this sub-regulation shall contain details as specified in Twelfth Schedule and such other details as are necessary for the purpose of providing a true and fair view of the operations of the mutual fund.
17. Substituted for two months by the. SEBI (Mutual Funds) (second Amendment) Regu
The trustees shall be bound to make such disclosures to the unit holders as are essential in order to keep them informed about any information which may have an adverse bearing on their investments.
(1) The Board may appoint one or more persons as inspecting officer to undertake the inspection of the books of accounts, records, documents and infrastructure, systems and procedures or to investigate the affairs of a mutual fund, the trustees and asset management company for any of the following purposes, namely:
(a) to ensure that the books of accounts are being maintained by the mutual fund, the trustees and asset management company in the manner specified in these regulations;
(b) to ascertain whether the provisions of the Act and these regulations are being complied with by the mutual fund, the trustees and asset management company;
(c) to ascertain whether the systems, procedures and safeguards followed by the mutual fund are adequate;
(d
(1) Before ordering an inspection or investigation under regulation 61 the Board shall give not less than ten days notice to the mutual fund, asset management company or trustees as the case may be.
(2) Notwithstanding anything contained in sub-regulation (1), where the Board is satisfied that in the interest of the investors no such notice should be given, it may, by an order in writing direct that such inspection or investigation be taken up without such notice.
(3) During the course of inspection or investigation, the mutual fund, trustees or asset management company against whom the inspection or investigation is being carried out shall be bound to discharge his obligations as provided in regulation 63.
(1) It shall be the duty of the mutual fund, trustees or asset management company whose affairs are being inspected or investigated, and of every director, officer and employee thereof, to produce to the inspecting officer such books, accounts, records, and other documents in its custody or control and furnish him such statements and information relating to the activities as mutual funds, trustees or asset management company, as the inspecting officer may require, within such reasonable period as the inspecting officer may specify.
(2) The mutual fund, trustees or asset management company shall allow the inspecting officer to have a reasonable access to the premises occupied by it or by any other person on its behalf and also extend reasonable facility for examining any books, records, documents, and computer data in the possession of the mutual fund, trustees and asset managem
The inspecting officer shall, as soon as possible, on completion of the inspection or investigation submit a report to the Board:
Provided that if directed to do so by the Board, he may submit interim reports.
The Board or the Chairman shall after consideration of inspection or investigation report take such action as the Board or Chairman may deem fit and appropriate including action under the Securities and Exchange Board of India ( Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty ) Regulations,2002.]
1. Substituted by SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 w.e.f 27.09.2002. Prior to substitution it read as under:
Communications of findings, etc.
65.(1) The Board shall, after consideration of the inspection report or investigation report referred to in regulation 64, communicate the findings of the inspecting officer to the mutual fund, trustees or asset management company as the case may be, and give him an opportunity
Without prejudice to the provisions of regulation 55, the Board shall have the power to appoint an auditor to inspect or investigate, as the case may be, into the books of accounts or the affairs of the mutual fund, trustee or asset management company:
Provided that the Auditor so appointed shall have the same powers of the inspecting officer as stated in Regulation 61 and the obligation of the mutual fund, asset management company, trustee, and their respective employees in regulation 63, shall be applicable to the investigation under this regulation.
The Board shall be entitled to recover such expenses including fees paid to the auditors as may be incurred by it for the purposes of inspecting the books of accounts, records and documents of the mutual fund, the trustees and the asset management company.
(a) contravenes any of the provisions of the Act and these regulations;
(b) fails to furnish any information or furnishes wrong information relating to its activity as a mutual fund as required under these regulations;
(c) fails to submit periodical returns as required under these regulations;
(d) does not co-operate in any inquiry or inspection conducted by the Board;
(e) fails to comply with any directions of the Board issued under the provisions of the Act or the regulations;
(f) fails to resolve the complaints of the investors or fails to give a satisfactory reply to the Board in this behalf;
(g) indulges in unfair trade practices in securities:
&n
The Board may initiate action for suspension or cancellation of registration of an intermediary holding a certificate of registration under section 12 of the Act who fails to exercise due diligence or to comply with the obligations under these regulations:
Provided that no such certificate of registration shall be suspended or cancelled unless the procedure specified in the regulations applicable to such intermediary is complied with.
(1) The Board may for the offences specified in sections 15 A to 15 E of the Act initiate action under section 15 I of the Act and in case of violation of any of the provisions of the Act or the regulations, initiate action under sections 11, 11B or section 24 of the Act.
2) The Board may in addition to suspension or cancellation of certificate, order suspension of launching of any scheme of a mutual fund for a period not exceeding one year for violation of any of the provisions of these regulations after following procedure under this Chapter.
(3) The Board may during the pendency of any proceeding of suspension or cancellation under this Chapter also order suspension for launching of any scheme not exceeding three months without following procedure under this Chapter.
Provided that
In order to remove any difficulties in the application or interpretation of these regulations, the Board shall have the power to issue clarifications and guidelines in the form of notes or circulars which shall be binding on the sponsor, mutual funds, trustees, asset management companies and custodians.
.(1) The Securities & Exchange Board of India (Mutual Funds) Regulations, 1993 are hereby repealed.
(2) Notwithstanding such repeal:
(a) anything done or any action taken or purported to have been done or taken, including registration or approval granted, fees collected, scheme announced, registration or approval, suspended or cancelled, any inquiry or investigation commenced under the said regulations, shall be deemed to have been done or taken under the corresponding provisions of these regulations;
(b) any application made to the Board under the said regulations and pending before it shall be deemed to have been made under the corresponding provisions of these regulations;
(c) any appeals preferred to the Central Government under the said
SECURITIES AND EXCHANGE BOARD OF INDIA (MUTUAL FUNDS) REGULATIONS, 1996
[regulations 4, 9, 12, 28(2)]
FEES
I. A. APPLICATION FEES PAYABLE BY MUTUAL FUNDS 2[Rupees one lakh]
B. REGISTRATION FEES PAYABLE BY MUTUAL FUNDS 5[twenty five lakhs]
1[C. 4[ANNUAL FEES] PAYABLE BY MUTUAL FUNDS
Net Assets as on 31st March Service Fee payble
Upto Rs. 500 crores. Rs. 2.50 lakhs
Above Rs. 1000 crores and up to Rs. 3,000 crores Rs. 3.50 lakhs
Above Rs. 3000 crores and up to Rs. 5,000 crores Rs. 4.50 lakhs
&n
SECURITIES AND EXCHANGE BOARD OF INDIA
(MUTUAL FUNDS) REGULATIONS, 1996
[regulation 18(2)]
CONTENTS OF THE INVESTMENT MANAGEMENT AGREEMENT
The Investment Management Agreement shall contain the following provisions for the duties and responsibilities of the asset management company namely:-
i) the asset management company appointed by the trustees with the prior approval of the Board shall be responsible for floating schemes for the mutual fund after approval of the same by the trustees and managing the funds mobilised under various schemes, in accordance with the provisions of the Trust Deed and Regulations;
ii) the asset management company shall not undert
SECURITIES AND EXCHANGE BOARD OF INDIA
(MUTUAL FUNDS) REGULATIONS, 1996
[regulations 18(22), 25(16), 68(h)]
CODE OF CONDUCT
1. Mutual fund schemes should not be organised, operated, managed or the portfolio of securities selected, in the interest of sponsors, directors of asset management companies, members of Board of trustees or directors of trustee company, associated persons as1 in the interest of special class of unitholders rather than in the interest of all classes of unitholders of the scheme.
2. Trustees and asset management companies must ensure the dissemination to all unitholders of adequate, accurate, explicit and timely information fairly presented in a simple language about the investme
SECURITIES AND EXCHANGE BOARD OF INDIA
(MUTUAL FUNDS) REGULATIONS, 1996
[regulation 30(1)]
ADVERTISEMENT CODE
1. An advertisement shall be truthful, fair and clear and shall not contain a statement, promise or forecast which is untrue or misleading.
2. An advertisement shall be considered to be misleading if it contains -
(a) Misleading Statements:- Representations made about the performance or activities of the mutual fund in the absence of necessary explanatory or qualifying statements, and which may give an exaggerated picture of the performance or activities, than what it really is.
(b) An inaccurate portra
SECURITIES AND EXCHANGE BOARD OF INDIA
(MUTUAL FUNDS) REGULATIONS, 1996
[regulation 44(1)]
RESTRICTIONS ON INVESTMENTS
[1. A mutual fund scheme shall not invest more than 15% of its NAV in debt instruments issued by a single issuer which are rated not below investment grade by a credit rating agency authorised to carry out such activity under the Act. Such investment limit may be extended to 20% of the NAV of the scheme with the prior approval of the Board of Trustees and the Board of asset management company.
Provided that such limit shall not be applicable for investments in government securities and money market instruments.
14["Provided further that n
SECURITIES AND EXCHANGE BOARD OF INDIA
(MUTUAL FUNDS) REGULATIONS, 1996
[regulation 47]
INVESTMENT VALUATION NORMS
Mutual Fund shall value its investments according to the following valuation norms:
NAV of a scheme as determined by dividing the net assets of the scheme by the number of outstanding units on the valuation date.
1. Traded Securities :-
(i) The securities shall be valued at the last quoted closing price on the stock exchange.
(ii) When the securities are traded on more than one recognised stock exchange, the securities shall be valued at the last quoted
SECURITIES AND EXCHANGE BOARD OF INDIA
(MUTUAL FUNDS) REGULATIONS, 1996
3[Regulations 49F(1) and (2), 50(3),55(4)(iii)]
ACCOUNTING POLICIES AND STANDARDS 4[Part A: For Investment in Securities]
a. For the purposes of the financial statements, mutual fund shall mark all investments to market and carry investments in the balance sheet at market value. However, since the unrealised gain arising out of appreciation on investments cannot be distributed, provision has to be made for exclusion of this item when arriving at distributable income.
b. Dividend income earned by a scheme should be recognised, not on the date the dividend is declared, but on the date the share is quoted on an ex-dividend basis. For
SECURITIES AND EXCHANGE BOARD OF INDIA
(MUTUAL FUNDS) REGULATIONS, 1996
6[Regulation 49(3B)(b)]
3[Amortisation of Initial Issue Expenses for Close-ended Schemes]
Accounting treatment with regard to initial issue expenses:-
(a) Asset management companies may launch schemes either on a "load" or "no-load basis", or on a mixed basis with two classes of units in the same scheme-one with load and the other without load, provided that the implications of such load on the NAV for the investors shall be clearly explained through a worked-out example in the offer document. Asset Management Company may also launch "partial load" schemes in which a part of the load would be borne by the asset management companies
ANNUAL REPORT
1. Annual Report
The annual report shall contain
(ii) Report of the Board of Trustees on the operations of the various schemes of the fund and the fund as a whole during the year and the future outlook of the fund;
(iii) Balance Sheet and Revenue Account in accordance with paras 2, 3 and 4, respectively of this Schedule;
(iv) Auditors Report in accordance with paragraph 5 of this Schedule;
(v) Brief statement of the Board of Trustees on the following aspects, namely:-
(a) Liabilities and responsibilities of the Trustees and the Settlor; (b) Investment objective of each scheme;
SECURITIES AND EXCHANGE BOARD OF INDIA
(MUTUAL FUNDS) REGULATIONS, 1996
[Regulation 59]
HALF YEARLY FINANCIAL RESULTS FOR THE PERIOD
ENDED
SL.
No. PARTICULARS SCHEME
NAMES
I II III ------
1.1
1.2 Unit Capital at the beginning of the half-year period [Rs. in Crores]
Unit Capital at the end of the period [Rs. in Crores] 2
2 Reserves & Surplus [Rs. In Crores]
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