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(MUTUAL FUNDS) REGULATIONS, 1996 CONTENTS 1. Short title, application and commencementCHAPTER II: REGISTRATION OF MUTUAL FUND 3. Application for registrationCHAPTER III: CONSTITUTION AND MANAGEMENT OF MUTUAL FUND AND OPERATION OF TRUSTEES, ETC 14. Trust Deed to be registered under the Registration ActCHAPTER IV: CONSTITUTION AND MANAGEMENT OF ASSET MANAGEMENT COMPANY AND CUSTODIAN 19. Application by an asset management companyCHAPTER V: SCHEMES OF MUTUAL FUND 28. Procedure for launching of schemesCHAPTER VI: INVESTMENT OBJECTIVES AND VALUATION POLICIES 43. Investment objectiveCHAPTER VII: GENERAL OBLIGATIONS 50. To maintain proper books of accounts and records, etc.CHAPTER VIII: INSPECTION AND AUDIT 61. Board ‘s right to inspect and investigationCHAPTER IX: PROCEDURE FOR ACTION IN CASE OF DEFAULT 68. Suspension of certificateCHAPTER X: MISCELLANEOUS 77. Power of Board to issue clarificationsSCHEDULE I: FORMS FORM A - APPLICATION FOR THE GRANT OF REGISTRATION OF MUTUALSCHEDULE II: FEES SCHEDULE III: CONTENTS OF THE TRUST DEED SCHEDULE IV: CONTENTS OF THE INVESTMENT AGREEMENT SCHEDULE V: CODE OF CONDUCT SCHEDULE VI: ADVERTISEMENT CODE SCHEDULE VII: RESTRICTIONS ON INVESTMENTS SCHEDULE VIII: INVESTMENT VALUATION NORMS SCHEDULE IX: ACCOUNTING POLICIES AND STANDARDS SCHEDULE X: INITIAL ISSUE EXPENSES SCHEDULE XI: ANNUAL REPORT SCHEDULE XII: HALF YEARLYFINANCIAL RESULTS Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII THE GAZETTE OF INDIA EXTRAORDINARY SECURITIES AND EXCHANGE BOARD OF INDIA S.O.No.856(E) In exercise of the powers conferred by section 30 read with clause (c) of sub-section (2) of section 11 of the Securities and Exchange Board of India, Act 1992, (15 of 1992) the Securities and Exchange Board of India hereby makes the following regulations.
Short title, application and commencement 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. 2. In these regulations, unless the context otherwise requires:- (a) "Act" means the Securities and Exchange Board of India Act 1992, (15 of 1992); Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII Foot notes 1. Clause "mm" inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of Inida dated 12.01.1998. 2. Substituted for the following by the SEBI (Mutual Fund) (Amendment) Regulations, 1999 published in the Official Gazette of Inida dated 08.12.1999. "trustee" means a person who holds the property of the mutual fund in trust for the benefit of the unitholders and includes a trustee company and the directors of the trustee company" Back to top, Chapters I, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII 3. An application for registration of a mutual fund shall be made to the Board in Form A by the sponsor. Application fee to accompany the application 4. Every application for registration under regulation 3 shall be accompanied by non-refundable application fee as specified in the Second Schedule. Application to conform to the requirements 5. 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. 6. The Board may require the sponsor to furnish such further information or clarification as may be required by it. 7. For the purpose of grant of a certificate of registration, the applicant has to fulfil the following, namely:- (a) the sponsor should have a sound track record and general reputation of fairness and integrity in all his business transactions;Consideration of application 8. The Board, may on receipt of all information decide the application. Grant of Certificate of Registration 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. Terms and conditions of registration 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;Rejection of application 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. 12. A mutual fund shall pay before the 15th April each year a service 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 service fee at any time before the expiry of two months from the commencement of the financial year to which such fee relates. 13. The Board may not permit a mutual fund who has not paid service fee to launch any scheme. Back to top, Chapters I, II, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII Foot notes 3. Clause "aa" inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of Inida dated 12.01.1998.
CHAPTER III Trust Deed to be registered under the Registration Act 14. 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. 15. (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; orDisqualification from being appointed as trustees 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(3) An asset management company or any of its officers or employees shall not be eligible to act as a trustee of any mutual fund. (4) No person who is appointed as a trustee of a mutual fund can be appointed as a trustee of any other mutual fund unless - (a) such a person is an independent trustee referred to in sub-regulation (5); and4*[(5) Two thirds of the trustees shall be independent persons and shall not be associated with the sponsors or be associated with them in any manner whatsoever] (6) In case a company is appointed as a trustee then its directors can act as trustees of any other trust provided that the object of the trust is not in conflict with the object of the mutual fund. Approval of the Board for appointment of trustee 17. (1) No trustee shall initially or any time thereafter be appointed without prior approval of the Board. 5*[***] (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. Rights and obligations of the trustees 18. (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;7*[(4a) The compliance officer appointed under clause (d) of sub-regulaton (4) shall immediately and independently report to the Board any non-compliance observed by him.] (5) The trustees shall ensure that an asset management company has been diligent in empanelling the brokers, in monitoring securities transactions with brokers and avoiding undue concentration of business with any broker. (6) The trustees shall ensure that the asset management company has not given any undue or unfair advantage to any associates or dealt with any of the associates of the asset management company in any manner detrimental to interest of the unitholders. (7) The trustees shall ensure that the transactions entered into by the asset management company are in accordance with these regulations and the scheme. (8) The trustees shall ensure that the asset management company has been managing the mutual fund schemes independently of other activities and have taken adequate steps to ensure that the interest of investors of one scheme are not being compromised with those of any other scheme or of other activities of the asset management company. (9) The trustees shall ensure that all the activities of the asset management company are in accordance with the provisions of these regulations. (10) Where the trustees have reason to believe that the conduct of business of the mutual fund is not in accordance with these regulations and the scheme they shall forthwith take such remedial steps as are necessary by them and shall immediately inform the Board of the violation and the action taken by them. 8*[(11) Each trustee shall file the details of his transactions of dealing in securities with the Mutual Fund on a quarterly basis.] (12) The trustees shall be accountable for, and be the custodian of, the funds and property of the respective schemes and shall hold the same in trust for the benefit of the unit holders in accordance with these regulations and the provisions of trust deed. (13) The trustees shall take steps to ensure that the transactions of the mutual fund are in accordance with the provisions of the trust deed. (14) The trustees shall be responsible for the calculation of any income due to be paid to the mutual fund and also of any income received in the mutual fund for the holders of the units of any scheme in accordance with these regulations and the trust deed. (15) The trustees shall obtain the consent of the unitholders - (a) whenever required to do so by the Board in the interest of the unit-holders; or10*[15A. The trustees shall ensure that no change in the fundamental attributes of any scheme or the trust or fees and expenses payable or any other change which would modify the scheme and affects the interest of unitholders, shall be carried out unless, - (i) a written communication about the proposed change is sent to each unitholder and an advertisement is given in one English daily newspaper having nationwide circulation as well as in a newspaper published in the language of the region where the Head Office of the mutual fund is situated; and(16) The trustees shall call for the details of transactions in securities by the key personnel of the asset management company in his own name or on behalf of the asset management company and shall report to the Board, as and when required. (17) The trustees shall quarterly review all transactions carried out between the mutual funds, asset management company and its associates. (18) The trustees shall 11*[quarterly] review the networth of the asset management company and in case of any shortfall, ensure that the asset management company make up for the shortfall as per clause (f) of sub-regulation (1) of regulation 21. (19) The trustees shall periodically review all service contracts such as custody arrangements, transfer agency of the securities and satisfy itself that such contracts are executed in the interest of the unitholders. (20) The trustees shall ensure that there is no conflict of interest between the manner of deployment of its networth by the asset management company and the interest of the unitholders. (21) The trustees shall periodically review the investor complaints received and the redressal of the same by the asset management company. (22) The trustees shall abide by the Code of Conduct as specified in the Fifth Schedule. (23) The trustees shall furnish to the Board on a half yearly basis, - (a) a report on the activities of the mutual fund;12*[(24) The independent trustees referred to in sub-regulation (5) of regulation 16 shall give their comments on the report received from the asset management company regarding the investments by the mutual fund in the securities of group companies of the sponsor.] 13*[(25) Trustees shall exercise due diligence as under: General Due Diligence: (i) the Trustees shall be discerning in the appointment of the directors on the Board of the asset management company.B. Specific Due Diligence: The Trustees shall: (i) obtain internal audit reports at regular intervals from independent auditors appointed by the Trustees.(26) Notwithstanding anything contained in sub-regulations (1) to (25), the trustees shall not be held liable for acts done in good faith if they have exercised adequate due diligence honestly. (27) The independent directors of the trustees or asset management company shall pay specific attention to the following, as may be applicable, namely:- (i) the Investment Management Agreement and the compensation paid under the agreement.any service contract with the associates of the asset management company.] Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII Foot notes 4. Substituted for the following by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of India date 12.01.1998. "At least 50 % of the trustees shall be independent persons and no such trustees shall be an associate or a subsidiary or associated in any manner with the sponsor."5. Following proviso deleted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of India date 12.01.1998. " Provided further if any trustee resigns or retires a new trustee shall be appointed within a period of three months with the prior approval of the Board. "6. Substituted for the following by the SEBI (Investment Advise by Intermediaries) (Amendment) Regulations, 2001, published in the Official Gazette of India dated 29.05.2001 "appointed a compliance officer to comply with regulatory requirement and to redress investor grievances".7. Clause "4a" inserted by the SEBI (Investment Advise by Intermediaries) (Amendment) Regulations, 2001, published in the Official Gazette of India dated 29.05.2001. 8. Substituted for the following by the SEBI(Mutual Fund) (Amendment) Regulations, 1999 published in the Official Gazette of India dated 08.12.1999. "Each trustee shall file the details of his holdings in securities on a half yearly basis with the trust."9. Following clause (d) along with proviso deleted by the SEBI (Mutual Funds) (Second Amendment) Regulations, 2000 published in the Official Gazette of India dated 22.05.2000. Clause (d) along with proviso was inserted by the SEBI (Mutual Fund) Amendment Regulations, 1999 published in the Official Gazette of India dated 08.12.1999. "(d) when any change in the fundamental attributes of any scheme or the trust or fees and expenses payable or any other change which would modify the scheme or affect the interest of the unitholders is proposed to be carried out unless the consent of not less than three-fourths of the unit holders is obtained:10. "Clause 15A" inserted by the SEBI (Mutual Fund) (Second Amendment )Regulations, 2000 published in the Official Gazette of India dated 22.05.2000.9a*[Provided that no such change shall be carried out unless three fourths of the unit holders have given their consent and the unit holders who do not give their consent are allowed to redeem their holdings in the scheme.Explanation: For the purposes of this clause "fundamental attributes" means the investment objective and terms of a scheme." 11. Substituted for "continuously" by the SEBI (Mutual Fund) (Amendment) Regulations, 1998 published in the Official Gazette of India dated 12.01.1998. 12. "Clause 24" inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998 published in the Official Gazette of India dated 12.01.1998 13. "Clause 25" inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1999 published in the Official Gazette of India dated 08.12.1999 Back to top, Chapters I, II, III, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII CHAPTER IV Application by an asset management company 19. (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. Appointment of an asset management company 20. (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. Eligibility criteria for appointment of asset management company 21. (1) For grant of approval of the asset management company the applicant has to fulfil 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;(2) The Board may, after considering an application with reference to the matters specified in sub-regulation (1), grant approval to the asset management company. Terms and conditions to be complied with 22. 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;Procedure where approval is not granted 23. 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. Restrictions on business activities of the asset management company 24. The asset management company shall (1) not act as a trustee of any mutual fund;(3) the asset management company shall not invest in any of its schemes unless full disclosure of its intention to invest has been made in the offer documents 23*[in case of schemes launched after the notification of these regulations.] Provided that an asset management company shall not be entitled to charge any fees on its investment in that scheme. Asset Management Company and its obligations 25. (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. (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. (4) The asset management company shall submit to the trustees quarterly reports of each year on its activities and the compliance with these regulations. (5) The trustees at the request of the asset management company may terminate the assignment of the asset management company at any time: Provided that such termination shall become effective only after the trustees have accepted the termination of assignment and communicated their decision in writing to the asset management company. (6) Notwithstanding anything contained in any contract or agreement or termination, the asset management company or its directors or other officers shall not be absolved of liability to the mutual fund for their acts of commission or omissions, while holding such position or office. 24*{(7) (a) An asset management company shall not through any broker associated with the sponsor, purchase or sell securities, which is average of 5% or more of the aggregate purchases and sale of securities made by the mutual fund in all its schemes. Provided that for the purpose of this sub-regulation, aggregate purchase and sale of securities shall exclude sale and distribution of units issued by the mutual fund. Provided further that the aforesaid limit of 5% shall apply for a block of any three months. (b) An asset management company shall not purchase or sell securities through any broker [other than a broker referred to in clause (a) of sub-regulation (7)] which is average of 5% or more of the aggregate purchases and sale of securities made by the mutual fund in all its schemes, unless the asset management company has recorded in writing the justification for exceeding the limit of 5% and reports of all such investments are sent to the trustees on a quarterly basis. Provided that the aforesaid limit shall apply for a block of three months.} (8) An asset management company shall not utilise the services of the sponsor or any of its associates, employees or their relatives, for the purpose of any securities transaction and distribution and sale of securities: Provided that an asset management company may utilise such services if disclosure to that effect is made to the unit holders and the brokerage or commission paid is also disclosed in the half yearly annual accounts of the mutual fund. 25*[Provided further that the mutual funds shall disclose at the time of declaring half-yearly and yearly results; (i) any underwriting obligations undertaken by the schemes of the mutual funds with respect to issue of securities associate companies,(9) The asset management company shall file with the trustees the details of transactions in securities by the key personnel of the asset management company in their own name or on behalf of the asset management company and shall also report to the Board, as and when required by the Board. (10) In case the asset management company enters into any securities transactions with any of its associates a report to that effect shall be sent to the trustees 26*[***] 27*[at its next meeting]. (11) In case any company has invested more than 5 per cent of the net asset value of a scheme, the investment made by that scheme or by any other scheme of the same mutual fund in that company or its subsidiaries shall be brought to the notice of the trustees by the asset management company and be disclosed in the half yearly and annual accounts of the respective schemes with justification for such investment 28*[provided the latter investment has been made within one year of the date of the former investment calculated on either side.] (12) The asset management company shall file with the trustees and the Board - (a) detailed bio-data of all its directors alongwith their interest in other companies within fifteen days of their appointment; and30*[(13) Each director of the Asset Management Compay shall file the details of his transactions of dealing in securities with the trustees on a quarterly basis in accordance with the guidelines issued by the Board.] (14) The asset management company shall not appoint any person as key personnel who has been found guilty of any economic offence or involved in violation of securities laws. (15) The asset management company shall appoint registrars and share transfer agents who are registered with the Board. Provided if the work relating to the transfer of units is processed in-house, the charges at competitive market rates may be debited to the scheme and for rates higher than the competitive market rates, prior approval of the trustees shall be obtained and reasons for charging higher rates shall be disclosed in the annual accounts. (16) The asset management company shall abide by the Code of Conduct as specified in the Fifth Schedule. 26. (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. (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 represent the interest of the sponsor or its associates shall act as custodian for a mutual fund constituted by the same sponsor or any of its associate or subsidiary company. 27. 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. Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII Foot notes 14. Clause "aa" inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of Inida dated 12.01.1998. 15. "have not been found guilty of moral turpitude or convicted of economic offence or violation of securities laws" inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of Inida dated 12.01.1998. 16. Substituted for "has not been working" by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of Inida dated 12.01.1998. 17. Substituted for "whose" by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of Inida dated 12.01.1998. 18. Proviso inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of Inida dated 12.01.1998. 19. Substituted for the following Explanation by the SEBI (Mutual Fund) (Amendment) Regulations, 1999 published in the Official Gazette of Inida dated 08.12.1999. "Explanation for the purposes of this clause, "networth" means the paid up capital and free reserves of the company"20. Substituted for the following clause (e) by the SEBI (Mutual Fund) (Second Amendment) Regulations, 2000 published in the Official Gazette of Inida dated 22.05.2000. Clause (e) was inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1999 published in the Official Gazette of Inida dated 08.12.1999 "(e) any change in controlling interest of the asset management company shall be only with prior approval of trustees, the Board and the unit holders.21. Proviso inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1999 published in the Official Gazette dated 08.12.1999. 22. "portfolio management services" inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1999 published in the Official Gazette dated 08.12.1999. 23. "in case of schemes launched after the notification of these regulations" inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette dated 12.01.1998. 24. Substituted for the following sub regulation (7) by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette dated 12.01.1998 "No asset management company shall deal in securities through any broker associated with the sponsor or a firm which is an associate of a sponsor beyond 5% of the daily gross business of the mutual fund."25. Proviso inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1999 published in the Official Gazette dated 08.12.1999. 26. "immediately" omitted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette dated 12.01.1998. 27. "at its next meeting" inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette dated 12.01.1998. 28. Proviso inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette dated 12.01.1998. 29. Clause (c) inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette dated 12.01.1998. 30. Substituted for the following by the SEBI (Mutua Funds) (Second Amendment) Regulations, 2001, published in the Official Gazette dated 23.07.2001 "A statement of holdings in securities of the directors of the asset management company shall be filed with the trustees with the dates of acquisition of such securities at the end of each financial year". Back to top, Chapters I, II, III, IV, VI, VII, VIII, IX, X Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII Procedure for launching of schemes 28. (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. (2) Every mutual fund shall along with the offer document of each scheme pay filing fees as specified in the Second Schedule. Disclosures in the offer document 29. (1) The offer document shall contain disclosures which are adequate in order to enable the investors to make informed investment decision 31*[including the disclosure on maximum investments proposed to be made by the scheme in the listed securities of the group companies of the sponsor]. (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 32*[working] days from the date of filing, the asset management company may issue the offer document. 33*[(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 specified by the Board.] 34*[Nomination 29A (1) The asset management company shall provide an option to the unitholder to nominate, in the manner 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 unitholders may together nominate a person in whom all the rights in the units shall vest in the event of death of all the joint unit holders. 30. (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 35*[investment objective for each scheme] 31. The offer document and advertisement materials shall not be misleading or contain any statement or opinion which are incorrect or false. Listing of close ended schemes 32. Every close ended scheme shall be listed in a recognized stock exchange within six months from the closure of the subscription. Provided that listing of close ended scheme shall not be mandatory - (a) if the said scheme provides for periodic repurchase facility to all the unitholders with restriction, if any, on the extent of such repurchase; orRepurchase of close ended schemes 33. (1) The asset management company may at its option repurchase or reissue the repurchased units of a close ended 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 36*[***]. (3) The units of close ended scheme may be converted into open ended scheme,- (a) if the offer document of such scheme discloses the option and the period of such conversion; or(4) A close ended scheme shall be fully redeemed at the end of the maturity period 38*[***]. 39*[Provided that a close ended scheme may be allowed to be rolled over if the purpose, period and other terms of the roll over and all other material details of the scheme including the likely composition of assets immediately before the roll over, the net assets and net asset value of the scheme, are disclosed to the unitholders and a copy of the same has been filed with the Board. Provided further, that such roll over will be permitted only in case of those unitholders who express their consent in writing and the unitholders who do not opt for the roll over or have not given written consent shall be allowed to redeem their holdings in full at net asset value based price.] 34. No scheme of a mutual fund other than the 40*[initial] offering period of any equity linked savings schemes shall be open for subscription for more than 45 days. Allotment of Units and refunds of moneys 35. (1) The asset management company shall specify in the offer document, - (a) the minimum subscription amount it seeks to raise under the scheme; andProvided 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 oversubscription 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);(3) Any amount refundable under sub-regulation (2) shall be refunded within a period of six weeks from the date of closure of subscription list, by Registered A.D and by cheque or demand draft marked "A/C Payee" to the applicants. (4) In the event of failure to refund the amounts within the period specified in sub-regulation (3), the asset management company shall be liable to pay interest to the applicants at a rate of fifteen percent per annum on the expiry of six weeks from the date of closure of the subscription list. Unit certificates or Statement of Accounts 36. The asset management company shall issue to the applicant whose application has been accepted, unit certificates or a statement of accounts specifying the number of units allotted to the applicant as soon as possible but not later than six weeks from the date of closure of the 41*[initial subscription list and or from the date of receipt of the request from the unit holders 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 six weeks of the receipt of request for the certificate. 37. (1) An unit certificate unless otherwise restricted or prohibited under the scheme, shall be freely transferable by act of parties or by operation of law. (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. 38. No guaranteed return shall be provided in a scheme, - (a) unless such returns are fully guaranteed by the sponsor or the asset management company;Winding up 39. (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(3) Where a scheme is to be wound up under 42*[***] sub-regulation (2), the trustees shall give notice disclosing the circumstances leading to the winding up of the scheme:- (a) to the Board; andEffect of winding up 40. 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;Procedure and Manner of winding up 41. (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 such winding up, the balance shall be paid to the unit holders in proportion to their respective interest in the assets of the scheme as on the date when the decision for winding up was taken.(3) On the completion of the winding up, the trustee shall forward to the Board and the unit holders a report on the winding up containing particulars such as circumstances leading to the winding up, the steps taken for disposal of assets of the fund before winding up, expenses of the fund for winding up, net assets available for distribution to the unitholders and a certificate from the auditors of the fund. (4) Notwithstanding anything contained in this regulation, the provisions of these regulations in respect of disclosures of half yearly reports and annual reports shall continue to be applicable 43*[until winding up is completed or the scheme ceases to exist.] 42. 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. Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII Foot notes 31. "including the disclosure on maximum investments proposed to be made by the scheme in the listed securities of the group companies of the sponsor" inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of India dated 12.01.1998. 32. "working" inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette dated 12.01.1998. 33. Sub-regulation (4) inserted by the SEBI (Mutual Fund) Amendment Regulations, 1998, published in the Official Gazette of India dated 12.01.1998. 34. Regulation 29A inserted by the SEBI (Mutual Fund) Amendment Regulations, 1998, published in the Official Gazette of India dated 11.06.2002. 35. Substituted for "in addition to the investment objective, the method and periodicity or valuation of the investment, the method and periodicity of sales and repurchases" by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of India dated 12.01.1998. 36. "without listing" deleted by the SEBI (Mutual Fund)( Amendment) Regulations, 1998, published in the Official Gazette of India dated 12.01.1998. 37. Substituted for the following clause (b) by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of India dated 12.01.1998. "The majority of the unitholders gives a consent to that effect."38. "unless a majority of the unitholders otherwise decide for its rollover by passing a resolution" omitted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of India dated 12.01.1998. 39. Substituted for the following provoiso by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of India dated 12.01.1998. "Provided the unitholders not opting for the rollover shall be allowed to redeem their holdings in the scheme."40. "initial" inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of India dated 12.01.1998. 41. Substituted for "subscription list" by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of India dated 12.01.1998. 42. "sub-regulation (1) or" deleted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of India dated 12.01.1998. 43. "initial subscription list and or from the date of receipt of the request from the unit holders in any open ended scheme" inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of India dated 12.01.1998. Back to top, Chapters I, II, III, IV, V, VII, VIII, IX, X Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII 43. The moneys collected under any scheme of a mutual fund shall be invested only in transferable securities in the money market or in the capital market or in privately placed debentures or securitised debts. Provided that moneys collected under any money market scheme of a mutual fund shall be invested only in money market instruments in accordance with directions issued by the Reserve Bank of India; Provided further that in case of securitised debts such fund may invest in asset backed securities 44*[and] mortgaged backed securities. Investment, borrowing, restriction, etc. 44. (1) Any investments to be made under regulation 43 shall be invested subject to the investment restriction specified in the Seventh Schedule. 45*[(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) 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. Provided that the mutual fund shall not borrow more than 20% of the net asset of the scheme and the duration of such a borrowing shall not exceed a period of six months. (3) The mutual fund shall not advance any loans for any purpose. 46*[(4) The mutual fund may lend securities in accordance with the Stock Lending Scheme of the Board.] 45. The funds of a scheme shall not in any manner be used in option trading or in short selling or carry forward transactions. 47*[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]. 46. 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. Method of valuation of investments 47. 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. Computation of Net Asset Value 48. (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: Provided that the Net Asset Value of any scheme for special target segment or any monthly income scheme which are not mandatorily required to be listed in any stock exchange under Regulation 32, may publish the Net Asset Value at monthly or quarterly intervals as may be permitted by the Board. 49. (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 price and the sale price of the unit shall not exceed 7% calculated on the sale price. (4) The price of units shall be determined with reference to the last determined Net Asset Value as mentioned in sub-regulation (3) unless, (a) the scheme announces the Net Asset Value on a daily basis; and Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII Foot notes 44. Substituted for the word "excluding" by the SEBI (Mutual Fund) (Second Amendment) Regulations, 2000, published in the Official Gazette of India dated 22.05.2000. 45. "Sub-regulation 1A" inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of India dated 12.01.1998. 46. Sub-regulation (4) inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of India dated 12.01.1998. 47. Proviso inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1999 published in the Official Gazette of India dated 08.12.1999 48. Substituted for the following clause (b) by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of India dated 12.01.1998. "the sale price is determined by adding to the future Net Asset Value a fixed premium which is declared in advance" Back to top, Chapters I, II, III, IV, V, VI, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII To maintain proper books of accounts and records, etc. 50. (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 49*[eight] 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 period together with information regarding distribution or accumulation of income accruing to the unitholder in a fair and true manner. 51. 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 50*[that financial year]. Limitation on fees and expenses on issue of schemes 52. (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(3) For schemes launched on a no load basis, the asset management company shall be entitled to collect an additional management fee not exceeding 1% of the weekly average net assets outstanding in each financial year. (4) In addition to the fees mentioned in sub-regulation (2), the asset management company may charge the mutual fund with the following expenses namely:- (a) initial expenses of launching schemes.(5) Any expense other than those specified in sub-regulation (2) and (4) shall be borne by the asset management company 53*[or trustee or sponsors]. Provided that initial expenses of floating the scheme shall not exceed six percent of the initial resources raised under that scheme and such expenses shall be accounted in the books of accounts of the scheme as specified in the Tenth Schedule. 54*[Provided further that any excess over the 6% initial issue expense shall be borne by the asset management company]. (6) The total expenses of the scheme excluding issue or redemption expenses, whether initially borne by the mutual fund or by the asset management company, but including the investment management and advisory fee shall be subject to the following limits:- (i) On the first Rs. 100 crores of the average weekly net assets 2.5%Provided that such recurring expenses shall be lesser by at least 0.25% of the weekly average net assets outstanding in each financial year in respect of a scheme investing in bonds. (7) Any expenditure in excess of the limits specified in sub-regulation (6) shall be borne by the asset management company 55*[or by the trustee or sponsors]. (8) The provisions of sub-regulations (3), (4),(5) and (6) will come into effect 56*[from 1st April, 1997] for those schemes of mutual funds which have been launched prior to notification of these regulations. Despatch of warrants and proceeds 53. Every mutual fund and asset management company shall, (a) despatch to the unitholders the dividend warrants within 57*[30 days] of the declaration of the dividend.Annual Report 54. 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. 55. (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:-59*[Mailing] of Annual Report and summary thereof(i) he has obtained all information and explanations which, to the best of his knowledge and belief, were necessary for the purpose of the audit; 56. (1) The schemewise Annual Report of a mutual fund or an abridged summary thereof 60*[***61*(***) shall be mailed to all unitholders] as soon as may be possible but not later than six months from the date of closure of the relevant accounts year. (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. 62*[Provided that the abridged scheme wise annual report mailed to unitholders need not contain full portfolio disclosure but must contain details on group company investments such as the name of the company, the amount of investment made in each company of the group by each scheme and the aggregate investments made by all schemes in the group companies of the sponsor. 63*(***)] (3) The report if 64*[mailed in abridged summary form as per sub regulation (1)] shall carry a note that 65*[for unitholders of a scheme] full Annual Report shall be available for inspection at the Head Office of the mutual fund and a copy thereof shall be made available to the unit holder on payment of such nominal fees as may be specified by the mutual fund. Annual Report to be forwarded to the Board 57. Every mutual fund 66*[***] shall within six 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. Periodic and continual disclosures 58. (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 67*[***] 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;(3) No sale of units of any scheme of a mutual fund shall be made by the trustees or an asset management company unless accompanied by documents which contain information which is adequate for the investors to take an informed decision. 59. A mutual fund and asset management company shall before the expiry of 68*[one month] 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. 69*[The half-yearly results must be printed in at least 7 point Times 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. 70*[59A. A mutual fund shall before the expiry of one month from the close of each half year (i.e., 31st March and 30th September), send to all unitholders a complete statement of its scheme portfolio. Provided that statement of scheme portfolio may not be sent to the unitholders, if the statement is published, by way of an advertisement, in one English daily 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.] 60. 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. Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII Foot notes 49. Substituted for "ten years" by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette dated 12.01.1998. 50. Substituted for "following year" by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette dated 12.01.1998. 51. Clauses (vii) to (xii) inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, or trustee or sponsors dated 12.01.1998. 52. Clause (vii) renumbered as sub clause (xiii) by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette dated 12.01.1998. 53. "or trustee or sponsors" inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette dated 12.01.1998. 54. Proviso inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette dated 12.01.1998. 55. "or by the trustee or sponsors" inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette dated 12.01.1998. 56. Substituted for "after three months from the date of notification of these regulations" by the SEBI (Mutual Fund) Amendment Regulations, 1997, published in the Official Gazette dated 15.04.1997. 57. Substituted for "45 days" by the SEBI (Mutual Fund) Amendment Regulations, 2001, published in the Official Gazette dated 23.07.2001. 58. Clauses (c) and (d) inserted by the SEBI (Mutual Fund) Amendment Regulations, 2000, published in the Official Gazette dated 14.03.2000. 59. Substituted for "Publication" inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of India dated 19.02.2002. 60. The sub-regulation (1) of regulation 56 as in SEBI (Mutual Fund) Regulations, 1996 read as follows "(1) The schemewise Annual Report of a mutual fund or an abridged summary thereof shall be published through an advertisement as soon as may be possible but not later than six months from the date of closure of the relevant accounts year."and an abridged schemewise annual report shall be mailed to all unitholders" was inserted by the SEBI (Mutual Fund) Amendment Regulations, 1998, published in the Official Gazette dated 12.01.1998. Aftre which the regulation read as follows "(1) The schemewise Annual Report of a mutual fund or an abridged summary thereof shall be published through an advertisement and an abridged schemewise annual report shall be mailed to all unitholders as soon as may be possible but not later than six months from the date of closure of the relevant accounts year.61. "shall be published through an advertisement and an abridged scheme wise annual report" was deleted by the SEBI (Mutual Fund) Amendment Regulations, 2002, published in the Official Gazette of India dated 19.02.2002. 62. Proviso inserted by the SEBI (Mutual Fund) Amendment Regulations, 1998, published in the Official Gazette of India dated 12.01.1998. 63. Following part of the proviso deleted by the SEBI (Mutual Funds) (Amendment) Regulations, 2002 published in the Official Gazette of India dated 19.02.2002. "provided further that full portfolo disclosure is not required if the full acounts are published in newspapers"64. Substituted for "if published in summary form", by the SEBI (Mutual Funds) (Amendment) Regulations, 2002 published in Official Gazette of India dated 20.02.2002 65. "for unitholders of a scheme" inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in Official Gazette of India dated 12.01.1998. 66. "and asset management company" deleted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in Official Gazette of India dated 12.01.1998. 67. "and asset management company" deleted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in Official Gazette of India dated 12.01.1998. 68. Substituted for "two months" by the SEBI (Mutual Funds) (Second Amendment) Regulations, 2001 published in Official Gazette of India dated 23.07.2001 69. "The half-yearly results must be printed in at least 7 point Times Roman font with proper spacing for easy reading" inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in Official Gazette of India dated 20.02.2002. 70. Regulation 59A inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 2000, published in the Official Gazette of India dated 14.03.2000. Back to top, Chapters I, II, III, IV, V, VI, VII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII Board's right to inspect and investigation 61. (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;Notice before inspection and investigation 62. (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. Obligations on inspection and investigation 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 management company or such other person and also provide copies of documents or other materials which in the opinion of the inspecting officer are relevant for the purpose of the inspection. (3) The inspecting officer, in the course of inspection or investigation, shall be entitled to examine or record the statements of any director, officer, or employee of the mutual fund, trustees and asset management company. (4) It shall be the duty of every director, officer, or employee of the mutual fund, asset management company or trustee to give to the inspecting officer all assistance in connection with the inspection or investigation, which the inspecting officer may reasonably require. Submission of report to the Board 64. 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. 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 of being heard: Provided that if any proceedings under Chapter VIII are initiated the procedure under Chapter VIII shall be followed. (2) On receipt of the reply if any, from the mutual fund, trustees or asset management company, as the case may be, the Board may call upon the trustees or asset management company to take such measures as the Board may deem fit in the interest of the investors, securities market and for due compliance with the provisions of these regulations. 66. 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. Payment of inspection fees to the Board 67. 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. Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII 68. The Board may suspend a certificate granted to a mutual fund if such mutual fund :- (a) contravenes any of the provisions of the Act and these regulations;Cancellation of certificate 69. The Board may cancel the certificate of registration granted to a mutual fund, if such mutual fund (a) is guilty of fraud, or has been convicted of an economic offence;Manner of making order of cancellation or suspension 70. No order of suspension or cancellation of certificate or the approval, as the case may be, shall be made by the Board against a mutual fund, trustees, asset management company except after holding an enquiry in accordance with the procedure specified in regulation 71. Manner of holding enquiry before suspension or cancellation 71. (1) For the purpose of holding an enquiry, under regulation 70 the Board may appoint one or more enquiry officers. (2) The enquiry officer shall issue to the mutual fund, asset management company or the trustee, as the case may be, at its registered office or the principal place of its business, a notice setting out the grounds on which action is proposed to be taken against it and calling upon it to show cause against such action within a period of fourteen days from the date of receipt of the notice. (3) The mutual fund, asset management company or trustee shall within fourteen days of the date of receipt of such notice, furnish to the enquiry officer a written reply, together with copies of documentary or other evidence relied on by it or sought by the Board from the mutual fund, trustees, or asset management company. (4) The enquiry officer shall give a reasonable opportunity of hearing to the mutual fund, trustees, or asset management company, to enable it to make submissions in support of its reply made under sub-regulation (3). (5) Before the enquiry officer, the mutual fund, trustees or asset management company may either appear in person or through any person duly authorised by the mutual fund, trustees or asset management company. Provided that no lawyer or advocate shall be permitted to represent the mutual fund, trustees or asset management company at the enquiry: Provided further that where a lawyer or an advocate has been appointed by the Board as a presenting officer under sub-regulation (6), it shall be lawful for the mutual fund, asset management company or trustee to present its case through a lawyer or advocate. (6) The enquiry officer may if he considers it necessary, ask the Board to appoint a presenting officer to present its case. (7) The enquiry officer shall, after taking into account all relevant facts and submissions made by the mutual fund, trustees or asset management company submit a report to the Board and recommend the action, if any, to be taken against the mutual fund, trustees or asset management company as also the grounds on which the penal action is justified. 72. (1) On receipt of the report from the enquiry officer, the Board shall consider the same and issue to the mutual fund, trustees or asset management company, a show-cause notice. (2) The mutual fund, asset management company or trustee, shall within fourteen days of the date of the receipt of the show-cause notice, send a reply to the Board. (3) The Board, after considering the reply of the mutual fund, trustees or asset management company, if any, shall as soon as possible pass such order as it deems fit. (4) The Board shall send to the mutual fund, trustees, or asset management company, a copy of the order made under sub-regulation (3). Effect of suspension or cancellation of certificate of registration 73. (1) On and from the date of the suspension of the certificate or the approval, as the case may be, the mutual fund, trustees or asset management company, shall cease to carry on any activity as a mutual fund, trustee or asset management company, during the period of suspension, and shall be subject to the directions of the Board with regard to any records, documents, or securities that may be in its custody or control, relating to its activities as mutual fund, trustees or asset management company. (2) On and from the date of cancellation of the certificate or the approval, as the case may be, the mutual fund, trustees or asset management company shall with immediate effect, cease to carry on any activity as mutual fund, trustees or asset management company, as the case may be. (3) The Board may in the interest of the unit holders issue directions with regard to the transfer of any records, documents or securities that may be in its custody or control, relating to its activities as mutual fund, trustees or asset management company. (4) The Board may in order to protect the interest of the unit holders order the transfer of records, document, securities, etc. to any person specifically appointed for the purpose or to any other trustee or asset management company. Provided that the Board shall while appointing such a person determine the terms and conditions of such an appointment. Publication of order of suspension or cancellation 74. The order of suspension or cancellation passed under sub-regulation (3) of regulation 72, may be published by the Board in two newspapers. 75. 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. 76. (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 no order shall be passed without giving an opportunity of hearing. Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII Power of the Board to issue clarifications 77. 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. 78. (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; Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules II, III, IV, V, VI, VII, VIII, IX, X, XI, XII SECURITIES AND EXCHANGE BOARD OF INDIA APPLICATION FOR THE GRANT OF REGISTRATION OF MUTUAL FUND NAME OF APPLICANT ______________________________________________________________ CONTACT PERSON/ __________________________________ NAME OF THE COMPLIANCE OFFICER TELEPHONE NO. : ______________________ FAX NO. INSTRUCTION FOR FILLING UP FORM :- 1. Applicants must submit a completed application form together with appropriate supporting documents to the Board. 2. It is important that this application form should be filled in accordance with the regulations. 3. An application which is not complete is liable to be rejected. 4. Answers must be typed and legible. 5. Information which needs to be supplied in more details may be given on separate sheets which should be attached to the application form. 6. The application must be signed by the competent person having authority to do so and all signatures must be in original. APPLICATION BY SPONSOR OF THE MUTUAL FUND FOR REGISTRATION 1] NAME OF THE SPONSOR 2] ADDRESS OF THE REGISTERED TELEPHONE NOS. TELEX NOS. FAX NOS. 3] NAME OF THE CONTACT PERSON 4] DATE AND PLACE OF 5] OBJECTS OF THE SPONSOR MAIN OBJECTS ANCILLARY OBJECTS 6] CAPITAL STRUCTURE AND 7] PRESENT LINE OF BUSINESS NUMBER OF YEARS IN THAT LINE 8] CONDENSED FINANCIAL INFORMATION 9] ACCOUNTING POLICIES 10] SYSTEMS AND PROCEDURES 11] NAMES OF THE ASSOCIATE 12] MANAGEMENT OF THE SPONSOR Names of key personnel Organisational structure Board of Directors of associate organisations, 13] NAMES AND ADDRESSES OF THE 14] NAMES AND ADDRESSES OF THE 15] COURT CASES/LITIGATIONS IN WHICH 16] AN APPLICATION FOR REGISTRATION OF MUTUAL FUND A) DRAFT TRUST DEED; B) DRAFT INVESTMENT MANAGEMENT AGREEMENT; AND C) DRAFT CUSTODIAN AGREEMENT (A) INCOME STATEMENT Dividend EXPENSES : Director's remuneration Gross Profit Depreciation (B) ASSETS AND LIABILITIES YEARS (Rs) Fixed Assets LESS Current Liabilities and REPRESENTED BY : Issued and Paid up capital TOTAL *provide full particulars of investments Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII FORM B CERTIFICATE OF REGISTRATION In exercise of the powers conferred by Section 30 of the Securities and Exchange Board of India Act, 1992, (15 of 1992) read with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 made thereunder the Board hereby grants a certificate of registration to _____________________________________ as a Mutual Fund. II. Registration Code for the Mutual Fund is MF/ / / Date By order Sd/- Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII FORM C TRUSTEESHIP OF THE MUTUAL FUND
1] IF THE TRUSTEESHIP OF THE MUTUAL [a] the draft Articles and Memorandum [b] Objects of the Trust Company [c] Board of Directors of the trustee [d] Key personnel [e] Systems and procedures, record [f] Names of auditors and bankers 2] IF THE TRUSTEESHIP OF THE MUTUAL [a] Name of the Institution [b] Address/telephone/telex/fax nos [c] Name of the contact person [d] Background information i.e. (number 3] IF THE TRUSTEESHIP OF THE MUTUAL FUND IS WITH [a] Names of the members of the Board [b] Age, experience, qualification [c] Relationship of the members of the 4] DRAFT TRUST DEED The draft trust deed should inter alia [a] Responsibilities, obligations and [b] A statement that investments should [c] Responsibilities, obligations and [d] Policies for investments, creation, [e] Policies for disclosures of scheme [f] Right of the trustees to obtain [g] Right to make spot checks on the [h] Public availability of the trust deed 5] INSTRUCTION FOR FILLING UP THE FORM Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII FORM D ASSET MANAGEMENT COMPANY 1] NAME OF THE ASSET MANAGEMENT COMPANY 2] PROPOSED REGISTERED OFFICE/ TELEPHONE NOS. TELEX NOS. FAX NOS. 3] NAME OF THE CONTACT PERSON 4] PROPOSED OBJECTS OF THE ASSET MANAGEMENT COMPANY MAIN OBJECTS ANCILLARY OBJECTS 5] a] PROPOSED CAPITAL STRUCTURE b] THE NET WORTH OF THE COMPANY 6] PROPOSED SYSTEMS AND PROCEDURES 7] NAMES OF THE ASSOCIATE 8] MANAGEMENT OF THE ASSET MANAGEMENT COMPANY IN CASE ASSET MANAGEMENT COMPANY IS AN EXISTING COMPANY 1] NAME OF THE ASSET MANAGEMENT COMPANY 2] ADDRESS OF THE REGISTERED TELEPHONE NOS. TELEX NOS. FAX NOS. 3] NAME OF THE CONTACT PERSON 4] DATE AND PLACE OF INCORPORATION OF THE ASSET MANAGEMENT COMPANY 5] OBJECTS OF THE ASSET MANAGEMENT COMPANY MAIN OBJECTS ANCILLARY OBJECTS 6] CAPITAL STRUCTURE AND NET WORTH OF THE COMPANY TO BE REPRESENTED BY 7] PRESENT LINE(S) OF BUSINESS 8] CONDENSED FINANCIAL INFORMATION 9] ACCOUNTING POLICIES 10] SYSTEMS AND PROCEDURES 11] NAMES OF THE ASSOCIATE 12] MANAGEMENT OF THE ASSET MANAGEMENT COMPANY 13] NAMES AND ADDRESSES OF THE 14] NAMES AND ADDRESSES OF THE 15] COURT CASES/LITIGATIONS IN 16] INSTRUCTION FOR FILLING UP THE FORM CONDENSED FINANCIAL INFORMATION (A) INCOME STATEMENT YEARS (Rs) Dividend EXPENSES : Director's remuneration (B) ASSETS AND LIABILITIES YEARS (Rs) Fixed Assets CURRENT ASSETS LESS Current Liabilities and NET WORTH REPRESENTED BY : TOTAL *provide full particulars of investments Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, III, IV, V, VI, VII, VIII, IX, X, XI, XII SECOND SCHEDULE FEES I. A. APPLICATION FEES PAYABLE BY MUTUAL FUNDS Rupees Twenty five Thousand B. REGISTRATION FEES PAYABLE BY MUTUAL FUNDS Rupees Twenty-Five lacs C. SERVICE FEES PAYABLE BY MUTUAL FUNDS Rupees Two lacs Fifty-Thousand D. FILING FEES FOR OFFER DOCUMENT RupeesTwenty-Five Thousand II. The fees referred to in clause I above, shall be paid by means of a bank draft payable to `The Securities and Exchange Board of India' at Mumbai. Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, IV, V, VI, VII, VIII, IX, X, XI, XII THIRD SCHEDULE CONTENTS OF THE TRUST DEED The Trust Deed shall contain the following clauses namely :- 1. i) A trustee in carrying out his responsibilities as a member of the Board of Trustees or of trustee company, shall maintain arms' length relationship with other companies, or institutions or financial intermediaries or any body corporate with which he may be associated. ii) No trustee shall participate in the meetings of the Board of Trustees or trustee company when any decisions for investments in which he may be interested are taken. iii) All the trustees shall furnish to the board of trustees or trustee company particulars of interest which he may have in any other company, or institution or financial intermediary or any corporate by virtue of his position as director, partner or with which he may be associated in any other capacity. 2. Minimum number of trustees must be mentioned in the Trust Deed. 3. The Trust Deed must provide that the trustees shall take into their custody, or under their control all the property of the schemes of the mutual fund and hold it in trust for the unitholders. 4. The Trust Deed must specifically provide that unitholders would have beneficial interest in the trust property to the extent of individual holding in respective schemes only. 5. The Trust Deed shall provide that it would be the duty of the trustees to act in the interest of the unit holders. 6. The Trust Deed shall provide that it is the duty of trustees to provide or cause to provide information to unitholders and Board as may be specified by the Board. 7. The Trust Deed shall provide that the trustees shall appoint an asset management company approved by the Board, to float schemes for the mutual fund after approval by the trustees and Board, and manage the funds mobilised under various schemes, in accordance with the provisions of the Trust Deed and Regulations. The trustees shall enter into an Investment Management Agreement with the asset management company for this purpose, and shall enclose the same with the Trust Deed. 8. The Trust Deed shall provide for the duty of the trustee to take reasonable care to ensure that the funds under the schemes floated by and managed by the asset management company are in accordance with the Trust Deed and Regulations. 9. The Trust Deed must provide for the power of the trustees to dismiss the asset management company under the specific events only with the approval of Board in accordance with the Regulations. 10. The Trust Deed shall provide that the trustees shall appoint a custodian and shall be responsible for the supervision of its activities in relation to the mutual fund and shall enter into a Custodian Agreement with the custodian for this purpose. 11. The Trust Deed shall provide that the auditor for the mutual fund shall be different from the Auditor of the asset management company. 12. The Trust Deed shall provide for the responsibility of the trustees to supervise the collection of any income due to be paid to the scheme and for claiming any repayment of tax and holding any income received in trust for the holders in accordance with the Trust Deed, Regulations. 13. Broad policies regarding allocation of payments to capital or income must be indicated in the Trust Deed. 14. The Trust Deed shall also explicitly forbid the acquisition of any asset out of the trust property which involves the assumption of any liability which is unlimited or shall not result in encumbrance of the trust property in any way. 15. The Trust Deed shall forbid the mutual fund 71*[***] to make or guarantee loans or take up any activity not in contravention of the Regulations. 16. Trusteeship fee, if any, payable to trustees shall be provided in the Trust Deed. 17. The Trust Deed shall provide that no amendment to the Trust Deed shall be carried out without the prior approval of the Board and unitholders is obtained. Provided however that in case a Board of trustees is converted into a trustee company subsequently such conversion shall not require the approval of unitholders. 18. The removal of the trustee in all cases would require the prior approval of the Board. 19. The Trust Deed shall lay down the procedure for seeking approval of the unitholders under such circumstances as are specified in the Regulations. 72*[73*(20. The Trust Deed shall state that a meeting of the trustees shall be held atleast once in every two calendar months and atleast six such meetings shall be held in every year) 21. The trust deed shall specify the quorum for a meeting of the trustees. Provided that the quorum for a meeting of the trustees shall not be constituted unless one independent trustee or director is present at the meeting. 22. The trust deed shall state that the minimum number of trustees shall be four.] Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII Foot notes 71. "and the asset management company" deleted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of India dated 12.01.1998. 72. Clauses 20, 21 and 22 inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1999 published in the Official Gazette of India dated 08.12.1999. 73. Substituted for the following cluase by the SEBI (Mutual Fund) (Third Amendment) Regulations, 2002 published in the Official Gazette of India dated 30.07.2002 "The trust deed shall state that a meeting of the trustees shall be held at least once in every three months and at least four such meetings shall be held in every year." Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII FOURTH SCHEDULE 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; Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII Foot notes 74. Substituted for "regulation 23" by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of India dated 12.01.1998. 75. "give or guaruntee loans or" omitted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of India dated 12.01.1998. 76. Subsituted for "application form or sales literature or other printed matter issued to prospective buyers, or advertisements or report and / or announcement (other than an announcement of prices and yeilds) addressed to the general body of unitholders, or to the press, or other communications media" by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of India dated 12.01.1998. 77. "Clause vii - a)" inserted by the SEBI (Mutual Fund) (Third Amendment) Regulations, 2002, published in the Official Gazette of India dated 30.07.2002. Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, VI, VII, VIII, IX, X, XI, XII FIFTH SCHEDULE 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 78*[as] 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 investment policies, investment objectives, financial position and general affairs of the scheme. 3. Trustees and asset management companies should avoid excessive concentration of business with broking firms, affiliates and also excessive holding of units in a scheme among a few investors. 4. Trustees and asset management companies must avoid conflicts of interest in managing the affairs of the schemes and keep the interest of all unitholders paramount in all matters. 5. Trustees and asset management companies must ensure schemewise segregation of 79*[bank accounts] and securities accounts. 6. Trustees and asset management companies shall carry out the business and invest in accordance with the investment objectives stated in the offer documents and take investment decision solely in the interest of unitholders. 7. Trustees and asset management companies must not use any unethical means to sell; market or induce any investor to buy their schemes. 80*[8. Trustees and the asset management company shall maintain high standards of integrity and fairness in all their dealings and in the conduct of their business (9) Trustees and the asset management company shall render at all times high standards of service, exercise due diligence, ensure proper care and exercise independent professional judgement. (10) The asset management company shall not make any exaggerated statement, whether oral or written, either about their qualifications or capability to render investment management services or their achievements]. 81*[(11) (a) The sponsor of the mutual fund, the trustees or the asset management company or any of their employees shall not render, directly or indirectly any investment advice about any security in the publicly accessible media, whether real – time or non real-time, unless a disclosure of his interest including long or short position in the said security has been made, while rendering such advice. (b) In case, an employee of the sponsor, the trustees or the asset management company is rendering such advice, he shall also disclose the interest of his dependent family members and the employer including their long or short position in the said security, while rendering such advice.] Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII Foot notes 78. Substituted for "or" by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of Inida dated 12.01.1998. 79. Substituted for "bank accounts" by the SEBI (Mutual Fund)( Amendment) Regulations, 1998, published in the Official dated 12.01.1998. 80. Clauses 8, 9 and 11 inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1999 published in the Official Gazette of India dated 08.12.1999. 81. Clause 11 inserted by the SEBI (Investment Advise by Intermediaries) (Amendment) Regulations, 2001, published in the Official Gazette of India 29.05.2001. Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII SIXTH SCHEDULE 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.3. The advertisement shall not be so designed in content and format or in print as to be likely to be misunderstood, or likely to disguise the significance of any statement. Advertisements shall not contain statements which directly or by implication or by omission may mislead the investor. 4. The sales literature may contain only information, the substance of which is included in the Funds' current advertisements in accordance with this Code. 5. Advertisements shall not be so framed as to exploit the lack of experience or knowledge of the investors. As the investors may not be sophisticated in legal or financial matters, care should be taken that the advertisement is set forth in a clear, concise, and understandable manner. Extensive use of technical or legal terminology or complex language and the inclusion of excessive details which may detract the investors should be avoided. 6. The advertisement shall not contain information, the accuracy of which is to any extent dependent on assumptions. 82*[Any advertisement that makes claims about the performance of the fund shall be supported by relevant figures.] 7. The advertisement shall not compare one fund with another, implicitly or explicitly, unless the comparison is fair and all information relevant to the comparison is included in the advertisement. 8. The Funds which advertises yield must use standardised computations such as annual dividend on face value, annual yield on the purchase price, and annual compounded rate of return. 9. Mutual funds shall indicate in all advertisements, the names of the Settlor, Trustee, Manager and or Financial Advisor to the Fund, bringing out clearly their legal status and liability of these entities 83*[***]. 84*[9A. All advertisements containing information regarding performance, advertising yield, return or any scheme detail or inviting subscription to the scheme shall contain disclosures of all the risk factors.] 10. All advertisements shall also make a clear statement to the effect that all mutual funds and securities investments are subject to market risks, and there can be no assurance that the fund's objectives will be achieved. 11. If however, in any Advertisement a mutual fund guarantees or assures any minimum rate of return or yield to prospective investors, resources to back such a guarantee shall also be indicated. 12. If any existing mutual fund indicates the past performance of the fund in advertisements, the basis for computing the rates of return/yield and adjustments made (if any) must be expressly indicated with a statement that, such information is not necessarily indicative of future results and may not necessarily provide a basis for comparison with other investments. 85*[Any advertisement containing information regarding performance, NAV, yield or returns shall give such data for the past three years, wherever applicable]. 13. All advertisements issued by a mutual fund or its sponsor or asset management company, shall state "all investments in mutual funds and securities are subject to market risks and the NAV of the schemes may go up or down depending upon the factors and forces affecting the securities market. 14. All advertisement launched in connection with the scheme should also disclose prominently the risks factors as stated in the offer document alongwith the following warning statements :- (a) ...... is only the name of the scheme and does not in any manner indicate either the quality of the scheme, its future prospects or returns; and,86*[14A. Any advertisement reproducing or purporting to reproduce any information contained in a offer document shall reproduce such information in full and disclose all relevant facts and not be restricted to select extracts relating to that item which could be misleading. 14B. No celebrities shall form part of the advertisement.] 15. No name can be given to a scheme with a view to subtly indicate any assurance of return, except in the cases of guaranteed return scheme in accordance with regulation 38. 16. No advertisement shall be issued stating that the scheme has been subscribed or oversubscribed during the period the scheme is open for subscription. 17. If a corporate advertisement is issued by the sponsor or any of the companies in the Group, or an associate company of the sponsor during the subscription period, no reference shall be made to the scheme of the mutual fund or mutual fund itself; otherwise it will be treated as an issue advertisement. 18. If a corporate advertisement of a sponsor issued prior to the launch of a scheme makes a reference to the mutual fund sponsored by it or any of its schemes launched/to be launched, it shall contain a statement to the effect that the performance of the sponsor has no bearing on the expected performance of the mutual fund or any of its schemes. 19. Advertisements on the performance of a mutual fund or its Asset management company shall compare the past performances only on the basis of per unit of statistics as per this Regulations. Advertisements for NAVs must indicate the past as well as the latest NAV of a scheme. The yield calculations will be made as provided in these regulations. Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII Foot notes 82. "Any advertisement that makes claims about the performance of the fund shall be supported by relevant figures" inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1999 published in the Official Gazette of India dated 08.12.1999. 83. "distinction between each of them, both legally and in terms of their functions, responsibilities and obligations" deleted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of India dated 12.01.1998. 84. "Clause 9A" inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of India dated 12.01.1998. 85. "Any advertisement containing information regarding performance, NAV, yield or returns shall give such data for the past three years, wherever applicable" inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1999 published in the Official Gazette of India dated December 8, 1999 86. "Clause 14A & 14B" inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1999 published in the Official Gazette of India dated 08.12.1999 Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VIII, IX, X, XI, XII SEVENTH SCHEDULE RESTRICTIONS ON INVESTMENTS 87*{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. 88*[Provided further that investment within such limit can be made in mortgaged backed securitised debt which are rated not below investment grade by a credit rating agency registered with the Board.] 1A. A mutual fund scheme shall not invest more than 10% of its NAV in unrated debt instruments issued by a single issuer and the total investment in such instruments shall not exceed 25% of the NAV of the scheme. All such investments shall be made with the prior approval of the Board of Trustees and the Board of asset management company.} 2. No mutual fund under all its schemes should own more than ten per cent of any company's paid up capital carrying voting rights. 3. Transfers of investments from one scheme to another scheme in the same mutual fund shall be allowed only if, - (a) such transfers are done at the prevailing market price for quoted instruments on spot basis.4. A scheme may invest in another scheme under the same asset management company or any other mutual fund without charging any fees, provided that aggregate interscheme investment made by all schemes under the same management or in schemes under the management of any other asset management company shall not exceed 5% of the net asset value of the mutual fund. 5. The initial issue expenses in respect of any scheme may not exceed six per cent of the funds raised under that scheme. 6. Every mutual fund shall buy and sell securities on the basis of deliveries and shall in all cases of purchases, take delivery of relative securities and in all cases of sale, deliver the securities and shall in no case put itself in a position whereby it has to make short sale or carry forward transaction or engage in badla finance. 90*[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.] 7. Every mutual fund shall, get the securities purchased or transferred in the name of the mutual fund on account of the concerned scheme, wherever investments are intended to be of long term nature. 8. Pending deployment of funds of a scheme in securities in terms of investment objectives of the scheme a mutual fund can invest the funds of the scheme in short term deposits of scheduled commercial banks. 91*{9. No mutual fund 92*[scheme] shall make any investment in; (a) any unlisted security of an associate or group company of the sponsor; or94*{10. No mutual fund scheme shall invest more than 10 per cent of its NAV in the equity shares or equity related instruments of any company. Provided that, the limit of 10 per cent shall not be applicable for investments 95*[in case of] index fund or sector or industry specific scheme. 96*[11.A mutual fund scheme shall not invest more than 5% of its NAV in the unlisted equity shares or equity related instruments in case of open ended scheme and 10% of its NAV in case of close ended scheme.]} Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII Foot notes 87. Substituted for the following "clause 1" by the SEBI(Mutual Fund) (Amendment) Regulations, 1999 published in the Official of India Gazette dated 08.12.1999. "Investment in debt instruments should be only in rated debt instruments not below investment grade rated by a credit rating agency authorised to carry such activity under the Act.88. Proviso inserted by the SEBI(Mutual Funds) (Second Amendment)Regulations, 2000, published in the Official of India Gazette dated 22.05.2000. 89. Explanation inserted by the SEBI(Mutual Fund) (Amendment) Regulations, 1998, published in the Official of India Gazette dated 12.01.1998. 90. Proviso inserted by the SEBI(Mutual Fund) (Amendment) Regulations, 1999, published in the Official of India Gazette dated 08.12.1999. 91. Clause (9) inserted by the SEBI(Mutual Fund) (Amendment) Regulations, 1998, published in the Official of India Gazette dated 12.01.1998. 92. "scheme" added by the SEBI(Mutual Fund) (Amendment) Regulations, 1999, published in the Official of India Gazette dated 08.12.1999. 93. "of all the schemes of a mutual fund" deleted by the SEBI(Mutual Fund) (Amendment) Regulations, 1999, published in the Official of India Gazette dated 08.12.1999. 94. Clauses 10 & 11 added by the SEBI(Mutual Fund) (Amendment) Regulations, 1999, published in the Official of India Gazette dated 08.12.1999. 95. Substituted for "in" by the SEBI(Mutual Fund) (Amendment) Regulations, 1999, published in the Official of India Gazette dated 14.03.2000. 96. Substituted for the following clause 11 by the SEBI(Mutual Fund) (Second Amendment) Regulations, 2000, published in the Official of India Gazette dated 22.05.2000. Clause 11 was added by the SEBI(Mutual Fund) (Amendment) Regulations, 1999, published in the Official of India Gazette dated 08.12.1999. "11. A mutual fund scheme shall not invest more than 5% of its NAV in the 96a*[unlisted] equity shares or equity related 96b*[instruments] in case of open ended scheme and 10% of its NAV in case of close ended scheme." Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, IX, X, XI, XII EIGHTH SCHEDULE 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.2. `Non-traded Securities':- (i) When a security is not traded on any stock exchange for a period of 98*[thirty] days prior to the valuation date, the scrip must be treated as a `non-traded' scrip.3. Until they are traded, the value of the "rights" shares should be calculated as: Vr =n x (Pex – Pof) m Where Vr = Value of rights n = no. of rights offered m = no. of original shares held Pex = Ex-rights price Pof = Rights Offer Price Where the rights are not treated pari-passu with the existing shares, suitable adjustment should be made to the value of rights. Where it is decided not to subscribe for the rights but to renounce them and renunciations are being traded, the rights can be valued at the renunciation value. 4. All expenses and incomes accrued upto the valuation date shall be considered for computation of net asset value. For this purpose, while major expenses like management fees and other periodic expenses should be accrued on a day to day basis, other minor expenses and income need not be so accrued, provided the non-accrual does not affect the NAV calculations by more than 1%. 5. Any changes in securities and in the number of units be recorded in the books not later than the first valuation date following the date of transaction. If this is not possible given the frequency of the Net Asset Value disclosure, the recording may be delayed upto a period of seven days following the date of the transaction, provided that as a result of the non-recording, the Net Asset Value calculations shall not be affected by more than 100*[1%]. 101*[6. In case the Net Asset Value of a scheme differs by more than 1%, due to non - recording of the transactions, the investors or scheme/s as the case may be, shall be paid the difference in amount as follows:- (i) If the investors are allotted units at a price higher than Net Asset Value or are given a price lower than Net Asset Value at the time of sale of their units, they shall be paid the difference in amount by the scheme.102*[6.Thinly traded securities as defined in the guidelines shall be valued in the manner as specified in the guidelines issued by the Board 7. The aggregate value of illiquid securities as defined in the guidelines shall not exced 15% of the total assets of the scheme and any illiquid securities held above 15% of the total assets shall be valued in the manner as specified in the guidelines issued by Board] Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII Foot notes 97. Substituted for the word "sixty", by the SEBI (Mutual Funds)(Amendment) Regulations, 2001, published in the Official Gazette of India dated 23.01.2001. 98. Substituted for the word "sixty", by the SEBI (Mutual Funds)(Amendment) Regulations, 2001, published in the Official Gazette of India dated 23.01.2001. 99. Substituted for Clause c by the SEBI(Mutual Fund) (Amendment) Regulations, 1999, published in the Official of India Gazette dated 08.12.1999. 100. Substituted for "2" by the SEBI(Mutual Fund) (Amendment) Regulations, 1999, published in the Official of India Gazette dated 30.08.2002. 101. "Clause 6" inserted by the SEBI(Mutual Fund) (Amendment) Regulations, 1999, published in the Official of India Gazette dated 30.08.2002. 102. "Clauses 6 & 7" inserted by the SEBI(Mutual Fund) (Amendment) Regulations, 1999, published in the Official of India Gazette dated 08.12.1999. Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, X, XI, XII NINTH SCHEDULE ACCOUNTING POLICIES AND STANDARDS 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 investments which are not quoted on the stock exchange, dividend income must be recognised on the date of declaration. c. In respect of all interest-bearing investments, income must be accrued on a day to day basis as it is earned. Therefore when such investments are purchased, interest paid for the period from the last interest due date upto the date of purchase must not be treated as a cost of purchase but must be debited to Interest Recoverable Account. Similarly, interest received at the time of sale for the period from the last interest due date upto the date of sale must not be treated as an addition to sale value but must be credited to Interest Recoverable Account. d. In determining the holding cost of investments and the gains or loss on sale of investments, the "average cost" method must be followed. e. Transactions for purchase or sale of investments should be recognised as of the trade date and not as of the settlement date, so that the effect of all investments traded during a financial year are recorded and reflected in the financial statements for that year. Where investment transactions take place outside the stock market, for example, acquisitions through private placement or purchases or sales through private treaty, the transaction should be recorded, in the event of a purchase, as of the date on which the scheme obtains in enforceable obligation to pay the price or, in the event of a sale, when the scheme obtains an enforceable right to collect the proceeds of sale or an enforceable obligation to deliver the instruments sold. f. Bonus shares to which the scheme becomes entitled should be recognised only when the original shares on which the bonus entitlement accrues are traded on the stock exchange on an ex-bonus basis. Similarly, rights entitlements should be recognised only when the original shares on which the right entitlement accrues are traded on the stock exchange on an ex-rights basis. 103*[g. Where income receivable on investments has accrued but has not been received for the period specified in the guidelines issued by the Board, provision shall be made by debiting to the revenue acount the income so accrued in the manner specified by guidelines issud by the Board.] h. When in the case of an open-ended scheme units are sold, the difference between the sale price and the face value of the unit, if positive, should be credited to reserves and if negative is debited to reserve, the face value being credited to Capital Account. Similarly, when in respect of such a scheme, units are repurchased, the difference between the purchase price and face value of the unit, if positive should be debited to reserves and, if negative, should be credited to reserves, the face value being debited to the capital account. i. In the case of an open-ended scheme, when units are sold an appropriate part of the sale proceeds should be credited to an Equalisation Account and when units are repurchased an appropriate amount should be debited to Equalisation Account. The net balance on this account should be credited or debited to the Revenue Account. The balance on the Equalisation Account debited or credited to the Revenue Account should not decrease or increase the net income of the fund but is only an adjustment to the distributable surplus. It should therefore be reflected in the Revenue Account only after the net income of the fund is determined. j. In a close-ended scheme which provide to the unit holders the option for an early redemption or repurchase their own units, the par value of the unit has to be 104*[debited] to Capital Account and the difference between the purchase price and the par value, if positive, should be 105*[credited] to reserves and, if negative, should be 106*[debited] to reserves. A proportionate part of the unamortized initial issue expenses should also be transferred to the reserves so that the balance carried forward on that account is proportional to the number of units remaining outstanding. k. The cost of investments acquired or purchased should include brokerage, stamp charges and any charge customarily included in the broker's bought note. In respect of privately placed debt instruments any front-end discount offered should be reduced from the cost of the investment. l. Underwriting commission should be recognised as revenue only when there is no devolvement on the scheme. Where there is devolvement on the scheme, the full underwriting commission received and not merely the portion applicable to the devolvement should be reduced from the cost of the investment. Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII Foot notes 103. Substituted for the following "clasue g" by the SEBI(Mutual Funds)(Amendment) Regulations, 2001 published in the Official Gazette of India dated 23.01.2001. "Where icome receivable on investments has been accrued and has not been received for a period of 12 months beyond the due date, provision should be made by debit to the revenue account for the income so accrued and no further accrual of income should be made in respect of such investment."104. Substituted for "credited" by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of Inida dated 12.01.1998. 105. Substituted for "debited" by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of Inida dated 12.01.1998. 106. Substituted for "credited" by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of Inida dated 12.01.1998. Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, XI, XII TENTH SCHEDULE INITIAL ISSUE EXPENSES 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 and the balance by the scheme. However such schemes will not qualify to be "no load" schemes and would be treated in the same manner as "load" schemes. In case of a no load scheme, the initial issue expenditure shall be borne by the Asset Management Company 107*[Trustee Company or Sponsor]. (b) For a closed-ended scheme floated on a `load' basis, the initial issue expenses shall be amortised on a weekly basis over the period of the scheme. Provided that in case the schemes provides for partial redemption during the life of the scheme, the amortisation shall take into account the number of outstanding units and the aggregate amount during the relevant periods. (c) For open-ended schemes floated on a `load' basis, the initial issue expenses may be amortised over a period not exceeding five years. Issue expenses incurred during the life of an open-ended schemes shall not be amortised. (d) In case of closed-ended and open-ended schemes floated on a `load' basis, the unamortised portion of the expenses shall be included in the calculation of the NAV. However, such portion shall not be included in the NAV for the purposes of determining the asset management company's investment management and advisory fees or for determining the limitation of expenses under regulation 51 of these regulations. (e) For schemes floated on a `no-load' basis, the asset management company may levy an additional management fee not exceeding 1% of the NAV. The asset management company may be entitled to levy a contingent deferred sales charge for redemption during the first four years after purchase, not exceeding 4% of the redemption proceeds in the first year, 3% in the second year, 2% in the third year and 1% in the fourth year. All subsequent distribution charges must in the case of load schemes shall be borne by the scheme and in the case of no-load schemes borne by the asset management company. Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XII Foot notes 107. "Trustee Company or Sponsor" inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of Inida, dated 12.01.1998.
ELEVENTH SCHEDULE ANNUAL REPORT 1. Annual Report The annual report shall contain - (i) 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;2. Following accounting policies shall be followed by Mutual Funds for the preparation of accounts : i. The realised gains or losses on sale or redemption of investment, as well as unrealised appreciation or depreciation shall be recognised in all financial statements. For the purpose of all financial statements, all investments shall be marked to market and investments shall be carried out in the balance sheet at market value. However, till necessary guidance notes are issued by the Institute of Chartered Accountants of India to their members, in the above matter, investments may be continued to be valued at cost, with the market value shown separately and the reconciliation statement for the changes in investments valued in the two different ways ,shall be provided.3. Contents of Balance Sheet (i) The Balance Sheet shall give schemewise particulars of its assets and liabilities. These particulars shall contain information enumerated in Annexures 1A and 1B hereto. It shall also disclose, inter-alia, accounting policies relating to valuation of investments and other important areas.------------------------------------------------------------------------------------------------------------------ Rs lakh ------------------------------------------------------------------------------------------------------------------ Net Income as per Revenue Account 100 Add : Balance of undistributed income as As on 31st March 1995 30 Transfer to reserve 5 (85) viii. Provisions for doubtful deposits, doubtful debts and for doubtful outstanding and accrued income shall not be included under provisions on the liability side of the balance sheet, but shall be shown as a deduction from the aggregate value of it relevant asset. ix. Disclosure shall be made of all contingent liabilities showing separately underwriting commitments, uncalled liability on partly paid shares and other commitments with specifying details. 4. Contents of Revenue Account (i) The Revenue Account shall give schemewise particulars of the income, expenditure and surplus of the mutual fund. These particulars shall contain information enumerated in Annexure 2 of this schedule.5. Auditor's Report (i) All mutual funds shall be required to get their accounts audited in terms of a provision to that effect in their trust deeds. The Auditor's Report shall form a part of the Annual Report. It should accompany the Abridged Balance Sheet and Revenue Account. The auditor shall report to the Board of Trustees and not to the unit holders.6. Perspective Historical per Unit Statistics 1. This statement shall disclose the following schemewise per unit statistics for the past 3 years:(a) net assets value, per unit; Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII Foot notes 108. Substituted for "1993" by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of Inida dated 12.01.1998. 109. "at a price" inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of Inida dated 12.01.1998. 110. Substituted for "credited" by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of Inida dated 12.01.1998. 111. "inter alia" inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of Inida dated 12.01.1998. 112. Substituted for the following sub-clause (iii) by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of Inida dated 23.01.2001 "The Balance Sheet shall disclose under each type of investment the aggregate carrying value and market value of non-performing investments. An investment shall be regarded as non-performing if it has provided no returns in the form of dividend or interest for more than 2 years as at the end of the accounting year of the mutual fund. However, disclosure of such non-performing investments shall not be necessary of all investments are valued at marked to market"113. Clause (c) omitted by the SEBI ( Mutual Funds) (Amendment) Regulations, 2000 published in the Official Gazette dated 14.03.2000. Clause (c) read as follows in SEBI (Mutual Funds) Regulations, 1996 published in the Official Gazette dated 09.12.1996 "Where an individual investment constitutes more than 2% of the total investments in the major classification, individual disclosure shall be made of such investment."The above clause (c) was substituted for the following by the SEBI ( Mutual Funds) (Amendment) Regulations, 2000 published in the Official Gazette dated 12.01.1998 "(c) full schemewise portfolio of investments of a mutual fund.114. "Clause (j)" inserted by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of Inida dated 12.01.1998. 115. Clause (j) renumbered as (k) by the SEBI (Mutual Fund) (Amendment) Regulations, 1998, published in the Official Gazette of Inida dated 12.01.1998. Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI
[HALF YEARLY FINANCIAL RESULTS FOR THE PERIOD ENDED______] SL.NO PARTICULARS SCHEME NAMES 1.1 2 Reserves & Surplus [Rs. In Crores] 4.1 4.3 Dividend paid per unit during the half-year [Rs.] 5.1 5.3 5.4 5.5 5.6 Interest [Rs. in Crores] Profit/(Loss) on sale/redemption of investments (other than inter scheme transfer/sale) [Rs. in Crores] Profit/(Loss) on inter-scheme transfer/sale of investments [Rs. in Crores] Other Income (indicating nature) [Rs. in Crores] Total Income (5.1 to 5.5) [Rs. in Crores] 6.1 6.3 6.4 6.5 Trustee Fees [Rs. in Crores] Total Recurring Expenses (including 6.1 and 6.2) [Rs. in Crores] Percentage of Management Fees to daily/weekly average net assets [%] Total Recurring expenses as a percentage of daily/weekly average net assets [%] 7.1 Last 1 year [%] Last 3 years [%] Last 5 years [%] Since launch of the scheme (date of launch to be given) [%] 8 Provision for Doubtful Income/Debts [Rs. in Crores] Considering movement of NAV during the half-year and after adjustment of dividend, bonus, etc. ** For the calculation of compounded annualised yield, the procedure specified in Standard Offer Document shall be followed. All performance calculations shall be based only on NAV and the payouts to the unitholders. The calculation of returns shall assume that all payouts during the period have been reinvested in the units of the scheme at the then prevailing NAV. The type of plan/option of the scheme for which yield is given shall also be mentioned. Notes: 1. Effect of changes in the accounting policies on the above items shall be disclosed by way of notes. 2. Details of transactions with associates in terms of Regulation 25 (8), if applicable, shall be given by way of note. 3. Details of investments made in companies which have invested more than 5% of the NAV of a scheme in terms of Regulation 25(11), if applicable, shall be given as a note. 4. Details of large holdings (over 25% of the NAV of the scheme), if applicable, including information about the no. of such investors and total holdings by them in percentage terms, shall be given as a note. 5. Any bonus declared during the half-year in respect of any of the schemes to be disclosed by way of a note. 6. Details of Deferred Revenue Expenditure, if any, shall be disclosed by giving a note. 7. Borrowings if any, above 10% of the net assets of any scheme of a mutual fund shall be disclosed. 8. Exposure if any, of more than 10% of the net assets of any scheme of a mutual fund investing in derivative products shall be disclosed.} Back to top, Chapters I, II, III, IV, V, VI, VII, VIII, IX, X, Schedules I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII Foot notes 116. Substituted for the following by the SEBI (Mutual unds) (Secod amendment) Regulations, 2001 published in the Official Gazette of India dated 23.07.2001
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