TaxTMI 
TaxTMI 
Circular on Mutual Funds
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....ars issued under MF Regulations, it has been decided to implement the following: 1. Gross Exposure Limits 1.1. Provisions of various circulars with regard to cumulative gross exposure limit for mutual fund schemes have been modified as under: "The cumulative gross exposure through equity, debt, derivative positions (including commodity and fixed income derivatives), repo transactions and credit default swaps in corporate debt securities, Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs), other permitted securities/assets and such other securities/assets as may be permitted by the Board from time to time should not exceed 100% of the net assets of the scheme." (References: paragraph-3 of SEBI Circular No. Cir/ IMD/ DF/ 11/ 2010 dated August 18, 2010, paragraph-3(b) of SEBI Circular No. CIR/IMD/DF/19/2011 dated November 11, 2011, paragraph-2(d) of SEBI Circular No. CIR/IMD/DF/23/2012 dated November 15, 2012, paragraph-4(v) of SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2019/65 dated May 21, 2019) 2. Investment Pattern 2.1. In partial modification to SEBI Circular No.IIMARP/MF/CIR/01/294/98 dated February 4, 1998, the portion on....
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....full responsibility of the management and the administration of the schemes including the matters relating to the reconciliation of accounts (as if the schemes had been floated by the new trustees on the date of taking over). ii. Assumption of the trusteeship of the assets and liabilities of the schemes including outstanding borrowings, unclaimed dividends and unclaimed redemptions, if any. iii. Assuming all responsibilities and obligations relating to the investor grievances, if any, in respect of the schemes taken over, in accordance with and pursuant to MF Regulations and various circulars issued thereunder. 3.4. Disclosures to Unitholders While seeking the approval of the Board for change in the control of the AMC, the mutual fund handing over the control to another person, should also file the draft letter / email to be sent to the unitholders along with draft advertisement to be published in the newspaper. The draft letter / email to the unitholders should, inter-alia, include the following information - i. the activities of the new sponsor and its financial track record and performance as prescribed in the standard offer document; ....
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....n machine readable format." 5. Filing of Annual Information Return (AIR) by Mutual Funds 5.1. Pursuant to issuance of CBDT guidelines & various circulars, the provisions of SEBI Circular No. IMD/CIR No.8/73580/06 dated August 4, 2006 on "Filing of Annual Information Return to be filed by Mutual Funds" stands deleted. However, mutual funds shall continue to comply with the following: "Mutual funds are required to submit the Annual Information Return (AIR) under section 285 BA of the Income Tax Act, and various guidelines notified by Central Board of Direct Taxes (CBDT). As per this requirement, Trustees of Mutual Funds or such other person managing the affairs of the Mutual Funds (as may be duly authorized by the trustees in this behalf) have to report specified financial transactions through electronic medium to Income Tax Department giving PAN of the transacting parties in an Annual Information Return (AIR)." 6. Investment in securities by employees of AMC(s) and Trustees of Mutual Funds 6.1. In partial modification to SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2016/124 dated November, 17, 2016: i. Paragraph A (2) (iv) shall be read as under: "In the ....
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....y or at the completion of the interval period shall be distributed."" ii. Second Point of paragraph C(2) stands deleted. iii. Fourth point of paragraph C(2) shall be read as under: "In case of Overnight funds, Liquid funds and Money Market funds, wherein investors have very short investment horizon, the performance can be advertised by simple annualisation of yields if a performance figure is available for at least 7 days, 15 days and 30 days provided it does not reflect an unrealistic or misleading picture of the performance or future performance of the scheme." 7.2. In Partial modification to SEBI Circular No. Cir/IMD/DF/23/2017 dated March 15, 2017: 7.2.1. The following portion of paragraph A(4)(a) stands deleted : "3. When a scheme has been in existence for more than 1 year but less than 3 years or 5 years, the same shall be mentioned as a footnote in the performance advertisement of the Mutual Fund scheme." 7.2.2. Paragraph A(4)(b) shall be read as under: "Where the scheme has been in existence for less than six months past performance shall not be provided. Further, if the scheme has been in existence for more than six mon....
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....les Head, Investor Relation Officer(s) (IRO), heads of other departments, Dealer(s) of the AMC and such other persons as deemed fit and identified as such by the AMC and the Trustees." 10.2. The term "Key Managerial Personnel" mentioned in SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2016/42 dated March 18, 2016 shall be replaced with the term "Key Personnel". 11. Updation of Scheme Information Document (SID) and Key Information Memorandum (KIM) 11.1. In partial modification to SEBI Circular No. SEBI/IMD/CIR No.5/ 126096/08 dated May 23, 2008, paragraph 5 on "The procedure for updation of SID and KIM" shall be read as under: "The procedure for updation of SID and KIM shall be as follows: i. For the open ended and interval schemes, the SID shall be updated within next six months from the end of the 1st half or 2nd half of the financial year in which schemes were launched. Subsequently, SID should be updated once in six months at the end of September and March. ii. The procedure to be followed in case of changes to the open ended and interval scheme shall be as under: a. In case of change in fundamental attributes in terms of Regulation 18 (15A....
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....IMD/CIR No.1/64057/06 dated April 4, 2006, the following has been decided: i. Paragraph II (c) under the heading "Unlisted Schemes / Plans" shall be read as under: "Within one calendar day of the decision by the trustees, AMC shall issue notice to the public communicating the decision including the record date. The record date shall be 5 calendar days from the date of publication in at least one English newspaper or in a newspaper published in the language of the region where the Head Office of the mutual fund is situated, whichever is issued earlier." 13.2. With respect to payment of interest in the event of failure of despatch of dividend payments within the stipulated time period in terms of Regulation 53(a) of MF Regulations, it is clarified that the interest for the delayed payment of dividend shall be calculated from the record date. 13.3. With respect to declaration of dividends upto monthly frequency, it has been decided that trustees can delegate to the officials of AMC to declare and fix the record date as well as decide the quantum of dividend, subject to the following: i. Record date is specified in the offer document and the same is adh....
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....m time to time, for payments including refunds to unitholders in addition to the cheque, demand draft or dividend warrants. 18.2. Further, AMCs may also use modes of despatch such as speed post, courier etc. for payments including refunds to unitholders in addition to the registered post with acknowledgement due. 19. Reporting the quarterly details of transactions of dealing in securities by Trustees 19.1. As per Regulation 18(11) of MF Regulations, trustees shall file the details of their transactions of dealing in securities on quarterly basis. In this regard, it has been decided that the same shall be filed by the trustees within one month from the end of respective quarters (March, June, September and December). 19.2. In partial modification to SEBI Circular No. MFD/CIR/09/014/2000 dated January 5, 2000, paragraph II (5) shall be read as under: "For the purpose of reporting of transactions of dealing in securities by the trustees under Regulation 18(11) of MF Regulations, only those transactions which exceed the value of INR Five lakhs are required to be reported." 20. Timelines for issuance of Consolidated Account Statement (CAS) 20.1. As per Regulat....