Form NS is the Standard Offer Document for schemes launched by Mutual Funds under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996. All Mutual Funds should use Form NS for filing an offer document pursuant to sub regulation (1) of Regulation 28 of the SEBI (Mutual Funds) Regulations, 1996, (Regulations) along with filing fees as specified in the Second Schedule to these Regulations.
The purpose of a scheme offer document is to provide essential information about the scheme in a way that will assist investors in making informed decisions about whether to purchase the units being offered. Since investors who rely on the offer document may not be sophisticated in legal or financial matters, care should therefore be taken to present the information in the offer document in simple language and in a clear, concise and easily understandable manner.
The Standard Offer Document enumerates the minimum disclosure requirements to be contained in the offer document of a scheme. A Mutual Fund is free to add any other disclosure, which in the opinion of the Trustees of the Mutual Fund (Trustees) or the Asset Management Company (AMC) is material for the investor, provided that such information is not presented in an incomplete, inaccurate or misleading manner. Care should be taken to ensure that inclusion of such information does not, by virtue of its nature, or manner of presentation, obscure or impede understanding of any information that is required to be included under the Standard Offer Document.
The Standard Offer Document prescribes only the nature of the disclosures that should be contained under various heads in the offer document of a scheme, and is not intended to describe the layout or the language to be contained therein, with the exception of Items I, II and III, which must appear in the same numerical order in the offer document of a scheme. If the Mutual Fund desires, it may include Item III as a part of Item I in the offer document.
The instructions for filling up the Standard Offer Document form are given under each head.
1. THE COVER PAGE
The cover page is required to contain the following information: (a) The name of the Mutual Fund;
(b) The name of the scheme;
(c) The type of the scheme;
(d) The name of the asset management company;
(e) The classes of units offered for sale;
(h) Opening, closing and earliest closing date (if any) for the offer; (i) A statement to the effect that (A) the offer document sets forth concisely; the information about the scheme that a prospective investor ought to know before investing; (B) the offer document should be retained for future reference;
(j) A statement to the effect that the scheme particulars have been prepared in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, as amended till date,and filed with SEBI, and the units being offered for public subscription have not been approved or disapproved by the Securities and Exchange Board of India nor has Securities and Exchange Board of India certified the accuracy or adequacy of the offer document.
(iv)Highlights of the scheme, irrespective of whether they appear on the Cover Page or not, shall make a specific disclosure in case of assured return schemes regarding the guarantee given either by the AMC or by the Sponsor to distribute income at the assured rate, and to redeem the capital invested, to the unitholder. This statement shall be in bold, legible fonts.
All terms used in the offer document shall be defined in this Section. Instructions :
III. RISK FACTORS
This section shall describe the Risk Factors in the scheme.
The Standard Risk Factors :
Scheme Specific Risk Factors:
IV. DUE DILIGENCE BY THE ASSET MANAGEMENT COMPANY
The Asset Management Company shall confirm that a Due Diligence Certificate duly signed by the Compliance Officer/Chief Executive Officer/Managing Director/Wholetime Director/Executive Director of the Asset Management Company has been submitted to SEBI, which reads as follows :
It is confirmed that :
(i) the draft offer document forwarded to SEBI is in accordance with the SEBI (Mutual Funds) Regulations, 1996 and the guidelines and directives issued by SEBI from time to time.
(ii) all legal requirements connected with the launching of the scheme as also the guidelines, instructions, etc., issued by the Government and any other competent authority in this behalf, have been duly complied with.
(iii) the disclosures made in the offer document are true, fair and adequate to enable the investors to make a well informed decision regarding investment in the proposed scheme.
(iv) the intermediaries named in the offer document are registered with SEBI and till date such registration is valid.
With respect to Point (ii) , while submitting the due diligence certificate, the asset management company shall clarify the legal requirements which are yet to be complied with.
The description on expenses to be incurred under the scheme shall include a table, furnishing the following information, using the captions provided, in the format illustrated below :
A. Unitholder Transaction Expenses or Sales Load :
Maximum Sales Load imposed on purchases ______ %
(as % of NAV)
Sales Load, if any, on issue of units in lieu ______ %
of dividends (as % of NAV)
Contingent Deferred Sales Load Year 1 ______ %
(give yearwise details as % of Year 2 ______ %
NAV) Year 3 ______ %
Year 4 ______ %
Redemption / Repurchase Load ______ %
(as % of NAV)
Switchover/Exchange Fee ______ % (as % of NAV)
Note : Wherever quantitative discounts are involved, this shall be disclosed. The Mutual Fund may charge the load within the stipulated limit of 7% and without any discrimination to any specific group of unitholders. However, any change at a later stage shall not affect the existing unitholders adversely.
B. Initial Issue Expenses :
(i) For the Present Scheme :
Under this head, briefly describe the nature of initial issue expenses for launching the scheme such as Advertising Expenses, Commission to Agents/Brokers, Registrar's Expenses, Printing & Marketing Expenses and Postage & Miscellaneous Expenses. Other expenses, if any, may be specified. The offer document shall disclose that initial issue expenses would be approximately _____% of the resources raised.
Estimate the amount that will be available to the scheme for every Rs.100 contributed by the investors.
A statement to the effect that total Initial Issue Expenses shall not exceed 6% of the initial resources raised under the scheme, as prescribed in the Regulations, and any excess beyond 6% shall be borne by the Asset Management Company.
(ii) Past Schemes : The Mutual Fund shall disclose total issue expenses at actuals for the schemes launched during the last one fiscal year. Expenses borne by the asset management company, if any, shall be disclosed. If no scheme has been launched during the last one fiscal year, the particulars may be provided in respect of the latest scheme launched by the Mutual Fund. Include a brief narration for the reasons for adverse variations if any, between the 'actual expenses' and 'estimated expenses'. C. Annual Scheme Recurring Expenses : (as a % of Average weekly Net Assets) Give a break-up of the recurring expenses chargeable to the scheme in the format illustrated below; however, certain items of expenditure may be clubbed together, if felt necessary by the Mutual Fund to give meaningful information to the investors :-
Investment management & Advisory fees ________ %
Additional Fees (if any) ________ %
Trustee Fees ________ %
Custodian Fees ________ %
Registrar & Transfer Agent Fees ________ %
Marketing & Selling Expenses including
Agents Commission ________ %
Brokerage & Transaction Cost pertaining
to the distribution of units ________ %
Audit Fees ________ % Costs related to investor communications ________ %
Costs of fund transfer from location to location________ %
Cost of providing account statements and
dividend redemption cheques and warrants ________ %
Insurance premium paid by the Fund ________ %
Winding up costs for terminating the Fund/
scheme ________ %
Costs of statutory advertisements ________ %
TOTAL ANNUAL RECURRING EXPENSES ________ %
(* To be specified as permitted under the Regulations)
The regulatory limits on Annual Recurring Expenses and Investment Management & Advisory fees in terms of regulation 52 shall be disclosed.
VI. CONDENSED FINANCIAL INFORMATION
|HISTORICAL PER UNIT STATISTICS||SCHEME NAME|
|YR. 1||YR. 2||YR. 3|
|NAV at the beginning of the year|
|Net Income per unit|
|Transfer to reserves (if any)|
|NAV at the end of the year|
|Net Assets end of period (Rs. Crs.)|
|Ratio of Recurring Expenses to net assets|
The NAV at the time of allotment should be taken at Rs.10 or face value i.e. the money that is given by the investor).
(c) Furnish the following information as of the end of the last fiscal year for the Mutual Fund, schemewise.:
Year Amount of Amt. as % of NAV Purpose of Time Period borrowing at the of borrowing
(Rs. crs.) time of borrowing
------ ----------------- ---------------------- ----------- ------------------------------
VII. CONSTITUTION OF THE MUTUAL FUND
Under this head, the following shall be discussed:
(i) A brief description of the objectives of the Mutual Fund;
(ii) Functions and responsibilities of the constituents of the Mutual Fund, viz. Sponsor, Asset Management Company, Trustees and Custodian;
(iii) Note on the activities of the Sponsor and its financial performance for the last three fiscal years which shall include figures for turnover/total income, profit after tax, equity capital, free reserves, net worth, earnings per share, book value per share and percentage of dividend paid;
(iv) Names and addresses of the Board of Trustees/Board of Directors of the Trustee Company and details of their principal occupations and current directorships. In case they are associates of the Sponsor or the Asset Management Company during the last three fiscal years, this shall be disclosed separately;
(v) Summary of substantial provisions of the Trust Deed which may be of material interest to the unitholders;
(vi) Trusteeship fees, if any.
VIII. INVESTMENT OBJECTIVES AND POLICIES
è supported by the ability to borrow from the Treasury.
The Portfolio Turnover policy, particularly for equity-oriented schemes shall be disclosed separately under the head "Portfolio Turnover" under the section Investment Objectives". In discussing investment techniques, the scheme shall briefly discuss in the offer document the probable effect of such techniques on the rate of total portfolio turnover of the scheme, if such effects are significant and also other consequences which will result from the higher portfolio turnover rate e.g. higher brokerage and transaction costs. (vii) Fundamental Attributes
The following Fundamental Attributes of the scheme, in terms of sub-regulation (15) of regulation 18 of the Regulations, shall be disclosed in the offer document under the head "Investment Objectives" with a statement to the effect that the ‘Fundamental Attributes’ cannot be changed without the consent of less than 75% of the unitholders.:
(a) Type of scheme.
(b) Investment Objective (objective, investment strategy, investment pattern including the tentative Equity/Debt/Money Market portfolio break-up with minimum and maximum asset allocation, while retaining the option to alter the asset allocation for a short term period on defensive considerations).
(c) Terms of the issue (provisions such as listing, repurchase/redemption, fees, expenses, guarantee/safety net).
IX. MANAGEMENT OF THE FUND
This section shall describe the manner in which the Mutual Fund is managed. The disclosure shall include -
(i) Identification of Asset Management Company and the name of the Fund Manager(s) who would be responsible for managing the scheme along with his qualifications, experience and background; (ii) Name and address of the Investor Relations Officer;.
(iii) Briefly state for the Asset Management Company of the Mutual Fund:
(a) The name and the address of the Asset Management Company and the names and addresses of the Directors on the Board of the AMC with a brief description of the experience of the AMC; (b) Disclosure of the date of entering the Investment Management Agreement. (c) A brief description of the Asset Management Company's compensation. If the fee is paid in some manner other than on the basis of average weekly net assets, briefly describe the basis of payment. (iv) Name and business experience/exposure of the key personnel of the AMC;
(v) The identity of any other person who provides significant administrative or business management services and a brief description of the services provided and the compensation to be paid therefore;.
(vi) The identity of the Custodian and a brief description of the services provided and the compensation to be paid therefore;
(vii) The name and principal business address of the Registrars, Transfer Agents and the dividend paying agent. A statement to the effect that the Board of the Trustees and the AMC have ensured that the Registrar has adequate capacity to discharge responsibilities with regard to processing of applications and despatching unit certificates to unitholders within the time limit prescribed in the Regulations and also has sufficient capacity to handle investor complaints;
(viii) Identification and name and address of the statutory auditor for the scheme;
(ix) State the Securities and Exchange Board of India's Registration Numbers of the Custodian, Registrar and Transfer Agents and Collecting Bankers for the Mutual Fund. It should be ensured that none of the intermediaries are prohibited by SEBI from carrying on their activities.
X. UNITS AND OFFER. a) Describe concisely the nature and the most significant attributes of the units being offered, including : (i) The minimum amount to be raised as per sub regulation (1) of regulation 35 of the Regulations. In case of assured return schemes, the maximum target amount to be raised by the Mutual Fund and refund beyond this amount shall also be disclosed.
(ii) The circumstances under which refund may take place and the period within which refunds must be carried out (in accordance with sub clause (2) and (3) of regulation 35).
(iii)A calendar indicating opening, closing, earliest closing, allotment and despatch of certificates.
(iv) The period within which allotment and despatch of certificates will be completed and relevant Regulations in this regard alongwith a statement to the effect that an advertisement will be published in a newspaper soon after completion of allotment procedure; provided that if allotment is assured to all applicants, such disclosure may not be required.
(v) If listing of units is envisaged, the names of specific stock exchanges where the application for listing of the units of the scheme has been made/proposed to be made.
(vi) The policy regarding reissue of repurchased units, including the maximum extent, the manner of reissue, the entity (the scheme or the AMC) involved in the same are to be disclosed. Where box trading is permitted and resorted to, the policy of the AMC on such trading including the policy on the cancellation of units in the box and reissue of such units including pricing of such units shall be disclosed.
(vii) In case there is likely to be an option to convert the close ended scheme into open ended, this option, along with the option to unitholders to redeem their units in full, shall be disclosed in the offer document.
(x) Maturity period of the scheme and the circumstances under which the duration of the scheme may be extended alongwith a statement that the extension shall be in accordance with the Regulations.
(xi) The circumstances under which the scheme shall be wound up (in accordance with Regulations).
(xii) Procedures to be followed for transfer and transmission of units.
XI. SALE OF UNITS
Describe briefly the manner in which the units of the scheme being offered under the scheme offer document may be purchased by the prospective investor. The descriptions should emphasise the procedures to be followed. Include :
(b) List any special purchase plans or methods such as letters of intent, accumulation plans, dividend reinvestment plans, withdrawal plans, exchange privileges, redemption reinvestment plans etc; and identify each class of individuals or transactions to which such plans apply.
(c) Any minimum initial or subsequent investment.
(d) If the scheme offers any additional facility to the investor such as insurance premium etc. pursuant to a plan adopted under a scheme:
(i) a brief description of the plan(s);
(ii) a listing of the principal types of activities for which payments will be made;
(iii) a statement of claims pending i.e. claims filed by the Mutual Fund with the insurance company - the number of cases and the aggregate amounts involved shall be disclosed.
(e) Details of who can invest, sales price fixation and nomination facilities may also be included here.
XII. DIVIDENDS AND DISTRIBUTIONS.
Describe briefly the scheme’s policy with respect to dividends and distributions, including any option that unitholders may have as to the receipt of such dividends and distributions.
XIII. INTER-SCHEME TRANSFERS
This section shall disclose the policy that the Mutual Fund has been following or proposes to follow with respect to inter-scheme transfers.
XIV. ASSOCIATE TRANSACTIONS
The following disclosures summarising historical information for the last three fiscal years of the schemes of the Mutual Fund under the management of the Asset Management Company reflecting associate transactions and the manner in which such transactions affected the performance of schemes of the Mutual Fund should be made. The disclosures shall include any underwriting obligations undertaken by the schemes of the Mutual Fund with respect to issues of associate companies, devolvement if any, of such commitments, subscription by the schemes in issues lead managed by associate companies, total business given to associate brokers and the percentage of brokerage commission paid to them and any distribution of units performed by associate companies.
This section shall also disclose :
(a) the policy for investing in group companies of the sponsor of a Mutual Fund that is followed/to be followed by the Mutual Fund, including
(i) the aggregate market value of investments in group companies of the Sponsor and asset Management Company by all the schemes of the Mutual Fund and its percentage of the aggregate net asset value of the Mutual Fund,
(ii) the maximum investments in those companies proposed by the scheme to be launched.
(b) in case any scheme of the Mutual Fund has invested more than 25% of its net assets in group companies, this shall be disclosed.
(c) names of associates of the Sponsor or the Asset Management Company with which the Mutual Fund proposes to have dealings, transactions and those whose services may be used for marketing and distributing the scheme and the commissions that may be paid to them.
XV. BORROWING BY THE MUTUAL FUND
This section shall disclose the borrowing policy of the Mutual Fund under the scheme including the intent and purpose of borrowing. Such disclosure will also include the circumstances under which borrowing will be resorted to, regulatory limits on borrowing, expected sources of borrowing, and possible collateral used if any. The potential risk of loss presented to the AMC and its unitholders by these transactions shall also be addressed.
XVI. STOCK LENDING BY THE MUTUAL FUND
This section shall disclose the policy that the Mutual Fund shall follow for stock lending.
XVII. NAV AND VALUATION OF ASSETS OF THE SCHEME
Describe briefly the policies of the Mutual Fund with regard to frequency of disclosure of NAV and Valuation of Assets and properties of the scheme in accordance with SEBI (Mutual Funds) Regulations, 1996. Briefly describe the evaluation norms with regard to non traded securities in accordance with clause 2 of Eighth Schedule of regulation 47.
XVIII. REDEMPTION OR REPURCHASE
(a) Describe briefly the basis and the manner of determination of redemption and repurchase price of the units in terms of the Regulations.
(b) Describe briefly all procedures for determining the redeeming and/or repurchase price of the units, any restrictions thereon, and any charges that may be attendant upon redemption and for terminal redemptions.
(c) Describe briefly the statutory restrictions governing the redemption and repurchase prices of units.
(d) Disclose the names of the centres where redemption can be effected.
XIX. ACCOUNTING POLICIES
This section shall briefly disclose the accounting policies to be followed by the Mutual Fund for the scheme.
XX. TAX TREATMENT OF INVESTMENTS IN MUTUAL FUNDS
This section shall disclose the various tax benefits that are available and the taxes that are charged to the investors in the schemes of Mutual Funds.
XXI. INVESTORS' RIGHTS AND SERVICES.
This section shall include the following:
- The rights of the investors under the scheme.
- Documents available for Inspection. These documents include Trust Deed, Investment Management Agreement, Custodian Agreement, Agreement with Registrars & Share Transfer Agents, MOA and AOA of the Trustee Company and Asset Management Company, SEBI (Mutual Funds) Regulations, 1996, Indian Trusts Act, 1882 and Consent of the Auditors, Legal Advisors.
- Access to information : Publication of NAV, its computation and unit price.
- Investor friendly services including names, addresses and telephone number of the contact person/grievances officer who would take care of investor queries and complaints.
XXII. INVESTOR GRIEVANCES REDRESSAL MECHANISM Describe briefly the investors' complaints history for the last three fiscal years of existing schemes and the redressal mechanism thereof. The offer document should include data updated as of 30 days prior to the launch of the scheme on the number of complaints received, redressed and pending with the Mutual Fund. XXIII. PENALTIES, PENDING LITIGATION OR PROCEEDINGS, FINDINGS OF INSPECTIONS OR INVESTIGATIONS FOR WHICH ACTION MAY HAVE BEEN TAKEN OR IS IN THE PROCESS OF BEING TAKEN BY ANY REGULATORY AUTHORITY
1. All cases of penalties awarded by SEBI under the SEBI Act or any of its regulations against the Sponsor of the Mutual Fund or any company associated with the Sponsor in any capacity including the Asset Management Company, Trustee Company/Board of Trustees, or any of the directors or key personnel (specifically the fund managers) of the Asset Management Company and Trustee Company. The nature of the penalty must be disclosed. For Sponsor and its associates, other than the penalties as mentioned above, the penalties awarded by any financial regulatory body, including stock exchanges, for defaults in respect of shareholders, debentureholders and depositors shall also be disclosed. Additionally, penalties awarded for any economic offence and violation of any securities laws shall be disclosed.
2. Any pending material litigation proceedings incidental to the business of the Mutual Fund to which the Sponsor of the Mutual Fund or any company associated with the Sponsor in any capacity including the AMC, Board of Trustees /Trustee Company or any of the directors or key personnel is a party. Any pending criminal cases against the Sponsor or any company associated with the Sponsor in any capacity including the AMC, Board of Trustees/Trustee Company or any of the directors or key personnel should also be disclosed separately.
3. Any deficiency in the systems and operations of the Sponsor of the Mutual Fund or any company associated with the sponsor in any capacity including the AMC or the Trustee Company which SEBI has specifically advised to be disclosed in the offer document, or which has been notified by any other regulatory agency, shall be disclosed.
4. Any enquiry/adjudication proceedings under the SEBI Act and the Regulations made thereunder, that are in progress against the Sponsor of the Mutual Fund or any company associated with the Sponsor in any capacity including the AMC, Board of Trustees/Trustee Company or any of the Directors or key personnel of the Asset Management Company shall be disclosed.
For and on behalf of the Board of the Directors of the Asset Management Company of the Mutual Fund