TaxTMI 
TaxTMI 
Circular for Mutual Funds
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.... for servicing investors as well as incur certain expenses while marketing the units of Mutual Funds. 3. In order to enable people with small saving potential and to increase reach of Mutual Fund products in urban areas and smaller towns, it has been decided that a transaction charge per subscription of Rs. 10,000/- and above be allowed to be paid to the distributors of the Mutual Fund products from the date of this circular. However, there shall be no transaction charges on direct investments. The transaction charge shall be subject to the following: i. For existing investors in a Mutual Fund, the distributor may be paid Rs. 100/- as transaction charge per subscription of Rs. 10,000/- and above. ii. As an incentive to ....
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.... distributor is splitting investments in order to enhance the amount of transaction charges and take stringent action including recommendations to AMFI to take appropriate action. 5. Mutual Funds/AMCs shall carry out an exercise of de-duplication of folios across all Mutual Funds within a period of 6 months from the date of this circular. 6. It is also clarified that as per SEBI circular no. SEBI/IMD/CIR No. 4/ 168230/09, dated June 30, 2009, upfront commission to distributors shall continue to be paid by the investor directly to the distributor by a separate cheque based on his assessment of various factors including the service rendered by the distributor. B. Distributors of Mutual Fund products 1. It has been felt that in the....
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....ustomer risk categories. iii.In this respect, customer relationship and transactions shall be categorized as: a. Advisory - where a distributor represents to offer advice while distributing the product, it will be subject to the principle of 'appropriateness' of products to that customer category. Appropriateness is defined as selling only that product categorization that is identified as best suited for investors within a defined upper ceiling of risk appetite. No exception shall be made. b. Execution Only - in case of transactions that are not booked as 'advisory', it shall still require: i.) The distributor has information to believe that the transaction is not appropriate for the customer, a written c....
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....gaged in this business. e. Customer on boarding and relationship management process, servicing standards, enquiry / grievance handling mechanism. f. Internal / external audit processes, their comments / observations as it relates to MF distribution business. g. Findings of ongoing review from sample survey of investors 2. Mutual Funds/AMCs may implement additional measures as deemed appropriate to help achieve greater investor protection. C. Transparency of information 1. SEBI vide circular no. SEBI/IMD/CIR No. 4/ 168230/09, dated June 5, 2000, has stipulated that only compounded annualized yield shall be advertised if the scheme has been in existence for more than 1 year. 2. It has been decided, hence....
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....disclosure regarding quarterly/half yearly/yearly performance shall pertain to respective calendar quarterly/half yearly/yearly only. 7. When the performance of a particular Mutual Fund scheme is advertised, the advertisement shall also include the performance data of all the other schemes managed by the fund manager of that particular scheme. In case the number of schemes managed by a fund manager is more than six, then the AMC may disclose the total number of schemes managed by that fund manager along with the performance data of top 3 and bottom 3 schemes (in addition to the performance data of the scheme for which the advertisement is being made) managed by that fund manager in all performance related advertisement. However, in su....