Manager
Investment Management Department
IMD/PS/11281/04
May 31, 2004
M/s Reliance Capital Asset Management Ltd.
Kamala Mills Compound,
Trade World, B Wing, VII Floor, S.B. Marg
Lower Parel (W)
Mumbai 400 013
Dear Sir,
Sub: Informal Guidance sought by you regarding investment in terms of clause 9 of Schedule VII.
By your letter dated May 8, 2004, you had made, interalia, an application under the SEBI (Informal Guidance) Scheme, 2003 seeking our opinion with regard to whether the Mutual Fund can purchase from the secondary market, debt instruments issued originally by associate or group companies of the sponsor by way of private placements.
We advise that the Regulations, interalia, prohibit investment in any security issued by way of private placement by an associate or group company of the sponsor and also the investment in any unlisted security of an associate or group company of the sponsor. Mutual Funds can, however invest in the listed securities of group companies of the sponsor upto 25 % of the net assets which may also include privately placed debt securities which are listed in the stock exchanges.
This letter is based on the representation made to the Division of Funds in your letters. Different facts or conditions might require a different result. This letter expresses the Division’s position on enforcement action only. It does not express decision of the Board on the Questions presented.
Yours faithfully,
(Prasad P.S)