THE GAZETTE OF INDIA

EXTRAORDINARY

PART –II – SECTION 3 – SUB SECTION (ii)

PUBLISHED BY AUTHORITY

SECURITIES AND EXCHANGE BOARD OF INDIA

NOTIFICATION

Mumbai, the 3^rd August, 2006

SECURITIES AND EXCHANGE BOARD OF INDIA

(MUTUAL FUNDS) (THIRD AMENDMENT) REGULATIONS, 2006

S.O No.1254 (E). – In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following Regulations to further amend the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, namely :-

1. These Regulations may be called the Securities and Exchange Board of India (Mutual Funds) (Third Amendment) Regulations, 2006.

2. They shall come into force on the date of their publication in the Official Gazette.

3. In the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996:

(i) in regulation 2, after clause (e), the following clause shall be inserted, namely –

“(ea) ‘capital protection oriented scheme’ means a mutual fund scheme which is designated as such and which endeavours to protect the capital invested therein through suitable orientation of its portfolio structure;”

(ii) in regulation 12, including the marginal note thereof, for the words “service fee” wherever they occur, the words “annual fee” shall be substituted;

(iii) in regulation 13, including the marginal note thereof, for the words “service fee” wherever they occur, the words “annual fee” shall be substituted;

(iv) in regulation 28, sub-regulation (2) shall be substituted with the following sub-regulations, namely:

“(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.”

(v) in regulation 32, in the proviso –

a. in clause (d), the full stop shall be omitted and the figure and word “; or” shall be inserted at the end;

b. after clause (d), the following clause shall be inserted, namely –

“(e) if the said scheme is a capital protection oriented scheme.”

(vi) in regulation 33, after sub-regulation (2), the following sub-regulation shall be inserted, namely –

“(2A) The asset management company shall not repurchase units of a capital protection oriented scheme before end of the maturity period.”

(vii) after regulation 38, the following regulation shall be inserted, namely –

“Capital protection oriented schemes

38A. 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

(viii) in regulation 52, in sub-regulation (4), in clause (b) –

a. in sub-clause (xii-a), the word “and,” appearing at the end shall be omitted;

b. after sub-clause (xii-a), the following sub-clause shall be inserted, namely –

“(xii-b) in case of a capital protection oriented scheme, rating fees; and,”

(ix) in Second Schedule, in paragraph I –

a. in item A, for the words “Rupees Twenty-five thousand”, the words “rupees one lakh” shall be substituted;

b. in item B, for the words “Rupees Twenty-five lacs”, the words “rupees fifty lakhs” shall be substituted;

c. in item C, in the opening part, for the words “Service fees”, the words “Annual fees” shall be substituted;

d. in item D, for the words “Rupees Twenty-five thousand”, the words and figures “0.03 per cent. of the amount raised in the new fund offer, subject to a minimum of rupees one lakh” shall be substituted.

F.No. SEBI/LAD/DOP/ 0308 /2006

M. DAMODARAN

CHAIRMAN

SECURITIES AND EXCHANGE BOARD OF INDIA

Footnotes:

(1) The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, the Principal Regulations were published in the Gazette of India on December 9, 1996 vide S.O. No. 856(E).

(2) The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 were subsequently amended –

(a) on April 15, 1997 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 1997 vide S.O. No.327(E).

(b) on January 12, 1998 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 1998 vide S.O. No.32(E).

(c) on December 08, 1999 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 1999 vide S.O. No.1223(E).

(d) on March 14, 2000 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2000 vide S.O. No.235 (E).

(e) on March 28, 2000 by the Securities and Exchange Board of India (Appeal to the Securities Appellate Tribunal) (Amendment) Regulations, 2000 vide S.O. No.278(E).

(f) on May 22, 2000 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2000 vide S.O. No.484 (E).

(g) on January 23, 2001 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2001 vide S.O. No.69 (E).

(h) on May 29, 2001 by the Securities and Exchange Board of India (Investment Advice by Intermediaries) (Amendment) Regulations, 2001 vide S.O. No.476(E).

(i) on July 23, 2001 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2001 vide S.O. No.698(E).

(j) on February 20, 2002 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2002 vide S.O. No.219 (E).

(k) on June 11, 2002 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2002 vide S.O. No.625 (E).

(l) on July 30, 2002 by the Securities and Exchange Board of India (Mutual Funds) (Third Amendment) Regulations, 2002 vide S.O. No.809(E).

(m) on September 9, 2002 by the Securities and Exchange Board of India (Mutual Funds) (Fourth Amendment) Regulations, 2002 vide S.O. No.956(E).

(n) on September 27, 2002 by the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 vide S.O. No.1045(E).

(o) on May 29, 2003 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2003 vide S.O.No. 632(E).

(p) on January 12, 2004 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2004 vide F.No SEBI\LAD\DOP\4\2004.

(q) on March 10, 2004 by the Securities and Exchange Board of India (Criteria for Fit and Proper Person) Regulations, 2004 vide S.O. No. 398(E).

(r) on January 12, 2006 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2006 vide S.O.No. 38(E).

(s) on May 22, 2006 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2006 vide S.O.No. 783(E).

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THE GAZETTE OF INDIA EXTRAORDINARY PART –II – SECTION 3 – SUB SECTION (ii) PUBLISHED BY AUTHORITY SECURITIES AND EXCHANGE BOARD OF INDIA NOTIFICATION Mumbai, the 3^rd August, 2006 SECURITIES AND EXCHANGE BOARD OF INDIA (MUTUAL FUNDS) (THIRD AMENDMENT) REGULATIONS, 2006 S.O No.1254 (E). – In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following Regulations to further amend the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, namely :- 1. These Regulations may be called the Securities and Exchange Board of India (Mutual Funds) (Third Amendment) Regulations, 2006. 2. They shall come into force on the date of their publication in the Official Gazette. 3. In the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996: (i) in regulation 2, after clause (e), the following clause shall be inserted, namely – “(ea) ‘capital protection oriented scheme’ means a mutual fund scheme which is designated as such and which endeavours to protect the capital invested therein through suitable orientation of its portfolio structure;” (ii) in regulation 12, including the marginal note thereof, for the words “service fee” wherever they occur, the words “annual fee” shall be substituted; (iii) in regulation 13, including the marginal note thereof, for the words “service fee” wherever they occur, the words “annual fee” shall be substituted; (iv) in regulation 28, sub-regulation (2) shall be substituted with the following sub-regulations, namely: “(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.” (v) in regulation 32, in the proviso – a. in clause (d), the full stop shall be omitted and the figure and word “; or” shall be inserted at the end; b. after clause (d), the following clause shall be inserted, namely – “(e) if the said scheme is a capital protection oriented scheme.” (vi) in regulation 33, after sub-regulation (2), the following sub-regulation shall be inserted, namely – “(2A) The asset management company shall not repurchase units of a capital protection oriented scheme before end of the maturity period.” (vii) after regulation 38, the following regulation shall be inserted, namely – “Capital protection oriented schemes 38A. 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.” (viii) in regulation 52, in sub-regulation (4), in clause (b) – a. in sub-clause (xii-a), the word “and,” appearing at the end shall be omitted; b. after sub-clause (xii-a), the following sub-clause shall be inserted, namely – “(xii-b) in case of a capital protection oriented scheme, rating fees; and,” (ix) in Second Schedule, in paragraph I – a. in item A, for the words “Rupees Twenty-five thousand”, the words “rupees one lakh” shall be substituted; b. in item B, for the words “Rupees Twenty-five lacs”, the words “rupees fifty lakhs” shall be substituted; c. in item C, in the opening part, for the words “Service fees”, the words “Annual fees” shall be substituted; d. in item D, for the words “Rupees Twenty-five thousand”, the words and figures “0.03 per cent. of the amount raised in the new fund offer, subject to a minimum of rupees one lakh” shall be substituted. F.No. SEBI/LAD/DOP/ 0308 /2006 M. DAMODARAN CHAIRMAN SECURITIES AND EXCHANGE BOARD OF INDIA Footnotes: (1) The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, the Principal Regulations were published in the Gazette of India on December 9, 1996 vide S.O. No. 856(E). (2) The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 were subsequently amended – (a) on April 15, 1997 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 1997 vide S.O. No.327(E). (b) on January 12, 1998 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 1998 vide S.O. No.32(E). (c) on December 08, 1999 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 1999 vide S.O. No.1223(E). (d) on March 14, 2000 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2000 vide S.O. No.235 (E). (e) on March 28, 2000 by the Securities and Exchange Board of India (Appeal to the Securities Appellate Tribunal) (Amendment) Regulations, 2000 vide S.O. No.278(E). (f) on May 22, 2000 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2000 vide S.O. No.484 (E). (g) on January 23, 2001 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2001 vide S.O. No.69 (E). (h) on May 29, 2001 by the Securities and Exchange Board of India (Investment Advice by Intermediaries) (Amendment) Regulations, 2001 vide S.O. No.476(E). (i) on July 23, 2001 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2001 vide S.O. No.698(E). (j) on February 20, 2002 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2002 vide S.O. No.219 (E). (k) on June 11, 2002 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2002 vide S.O. No.625 (E). (l) on July 30, 2002 by the Securities and Exchange Board of India (Mutual Funds) (Third Amendment) Regulations, 2002 vide S.O. No.809(E). (m) on September 9, 2002 by the Securities and Exchange Board of India (Mutual Funds) (Fourth Amendment) Regulations, 2002 vide S.O. No.956(E). (n) on September 27, 2002 by the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 vide S.O. No.1045(E). (o) on May 29, 2003 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2003 vide S.O.No. 632(E). (p) on January 12, 2004 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2004 vide F.No SEBI\LAD\DOP\4\2004. (q) on March 10, 2004 by the Securities and Exchange Board of India (Criteria for Fit and Proper Person) Regulations, 2004 vide S.O. No. 398(E). (r) on January 12, 2006 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2006 vide S.O.No. 38(E). (s) on May 22, 2006 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2006 vide S.O.No. 783(E).