TaxTMI 
TaxTMI 
Securities and Exchange Board of India (Mutual Funds) (Third Amendment) Regulations, 2024.
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....ided further that sub-regulations IV and V of regulation 3 of these amendment regulations shall come into force with effect from April 1, 2025. 3. In the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996,- I. in Chapter II, in regulation 11, after the words and symbol "in regulation 7", the words and symbol "or regulation 81" shall be inserted. II. in Chapter IV, in regulation 23, after the words and symbol "in regulation 21", the words and symbol "and regulation 86" shall be inserted. III. In regulation 29A,- (i) in sub-regulation (1), the words "in the manner specified in Fourth Schedule" shall be substituted with the words "in the manner as may be specified from time to time". (ii) the existing sub-regulation (2) shall be renumbered as sub-regulation (3). (iii) after sub-regulation (1), the following sub-regulation shall be inserted, namely: "(2) The unitholder shall have an option to nominate, in the manner as may be specified, a person who shall be authorized to conduct transactions on behalf of the unitholder in the event of the incapacitation of the unitholder." (iv) after sub-re....
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....ent Fund: 49X. (1) A Specialized Investment Fund shall not accept from an investor, an investment amount less than ten lakh rupees across all investment strategies in the manner as may be specified by the Board: Provided that the requirement of minimum investment amount shall not apply to an accredited investor. (2) The Fund Manager of Specialized Investment Funds shall have the relevant NISM certification as may be specified by the Board from time to time. (3) All provisions applicable to the schemes of a mutual fund under these regulations shall also apply to the Investment Strategies launched under the Specialized Investment Fund, unless otherwise specified. Procedure for launching of investment strategies: 49Y. (1) The investment strategies under the Specialized Investment Fund shall be launched in accordance with the procedure applicable to the schemes of the mutual funds, as laid down in regulation 28: Provided that a Specialized Investment Fund may launch such investment strategies in the manner as may be specified by the Board from time to time. (2) An investment strategy under the Specialized Investmen....
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....a) of sub-regulation (1) of regulation 7B: Provided further that the limit mentioned in sub-regulation (2) above shall be inclusive of ten per cent limit for mutual fund schemes as specified under clause 2 of Seventh Schedule. Explanation: If a mutual fund under all its schemes owns ten per cent of any company's paid up capital carrying voting rights, then the Specialized Investment fund under all its investment strategies shall not own more than five per cent of that company's paid up capital carrying voting rights. (3) No investment strategy of a Specialized Investment Fund shall invest more than 10 per cent of its NAV in the equity shares and equity-related instruments of any company. (4) A Specialized Investment Fund may invest in the units of REITs and InvITs subject to the following: (a) No Specialized Investment Fund under all its investment strategies shall own more than 20 per cent of units issued by a single issuer of REIT and InvIT: Provided that the limit mentioned in clause (a) of sub-regulation 4 above shall be inclusive of 10 per cent limit for mutual fund scheme as specified under clause 13 (a) of Seventh Schedul....
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....y be specified by the Board." VI. After Chapter X, the following new chapter shall be inserted, namely, - "CHAPTER XI MUTUAL FUNDS LITE Definitions 79. (1) For the purposes of this Chapter, unless the context otherwise requires- (a) "trustee" means a debenture trustee registered with the Board under the Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993: Provided that in case an existing sponsor transfers its eligible passive schemes from its existing mutual fund to a mutual fund lite in accordance with regulation 82, the MF Lite asset management company may appoint the existing trustee of the mutual fund as the trustee of the mutual fund Lite. (b) "Mutual Fund Lite" or "MF Lite" means a mutual fund that has obtained registration under this Chapter and is having only such index funds, exchange traded funds, fund of funds or other mutual fund schemes as may be specified by the Board from time to time. (c) "Mutual Fund Lite asset management company" or "MF Lite asset management company" or "MF Lite AMC" means an asset management company of a Mutual Fund Lite that has been grant....
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....igher; and (iii) have net profit after providing for depreciation, interest and tax in three out of immediately preceding five years including the fifth year; and (iv) have average net annual profit after depreciation, interest and tax during the immediately preceding five years of at least rupees five crore: Provided that if the requirements specified under Explanation to clause (a) are not fulfilled, the sponsor shall,- (i) adequately capitalize the MF Lite asset management company such that the net worth of the said asset management company is not less than rupees seventy five crore; and (ii) ensure that the initial shareholding of sponsor equivalent to capital contributed to the MF Lite asset management company to the extent of not less than rupees seventy five crore is locked-in for a period of three years; and (iii) appoint experienced personnel in the MF Lite asset management company such that the total combined experience of Chief Executive Officer, Chief Operating Officer, Chief Compliance Officer and Chief Investment Officer shall be at least twenty years; and (iv) ensure that in case of acquisition of existin....
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.... specified by the Board, and provide such other custodial services as may be required for managing a Mutual Fund Lite. Norms for shareholding. 82. (1) Notwithstanding anything contained under regulation 7B of these regulations, a sponsor shall be permitted to obtain a registration as a mutual fund under Chapter II of these regulations and a separate registration as a Mutual Fund Lite under this Chapter subject to conditions specified by the Board from time to time. (2) Notwithstanding anything contained under regulation 7B of these regulations, an existing sponsor under these regulations may transfer its passive scheme which is eligible as a mutual fund lite scheme from an existing mutual fund to a mutual fund lite belonging to a group entity of the same sponsor, subject to conditions as specified by the Board from time to time: Provided that if an existing sponsor transfers its passive schemes from its existing mutual fund to a mutual fund lite, the existing mutual fund shall not launch any passive schemes that are eligible as mutual fund lite schemes after such transfer. (3) Notwithstanding anything contained under regulation 7B of the....
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..... (4) The trustee shall have satisfactory wherewithal with respect to infrastructure, personnel, systems etc. as may be required for the proper discharge of its duties under these regulations. (5) The trustee shall oversee activities of the mutual fund lite asset management company in the interest of the unitholders and obtain periodic reports on its activities and status of compliance with applicable regulations in the manner as may be specified by the Board. (6) The trustees shall have the right to seek information from the mutual fund lite asset management companies in accordance with the trust deed. (7) Where the trustees have reason to believe that the conduct of the business of the mutual fund lite is not in accordance with these regulations or detrimental to the interest of the unitholders, they shall forthwith take such remedial steps, as are necessary and shall immediately inform the Board of such conduct and the action taken by them. (8) The trustees shall periodically review the status of unit holders' complaints and the redressal of the same by the mutual fund lite asset management company. (9) The trustee shall prov....
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....rsons. (20) The trustees shall also exercise due diligence on such matters as may be specified by the Board from time to time. (21) Notwithstanding anything contained in sub-regulations (1) to (20), the trustees shall not be held liable for acts done in good faith if they have exercised adequate due diligence and acted as per the terms of the trust deed. Networth requirement for the mutual fund lite asset management company. 86. (1) The mutual fund lite asset management company shall have a networth of not less than rupees thirty five crore deployed in assets as may be specified by the Board: Provided that the mutual fund lite asset management company may bring down the networth to rupees twenty five crore in case it has profits for five consecutive years. (2) Where the sponsor does not fulfil the requirements provided in part (i) to (iv) of the Explanation to clause (a) of regulation 81 of these regulations at the time of making application, the mutual fund lite asset management company shall have a networth of not less than rupees fifty crore deployed in assets as may be specified by the Board: Provided that the mutua....
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....on) of the mutual fund lite asset management company shall ensure that the mutual fund lite complies with all the provisions of these regulations and the guidelines or circulars issued in relation thereto from time to time and that the investments made by the fund managers are in the interest of the unit holders and shall also be responsible for the overall risk management function of the mutual fund lite. (7) Chief Executive Officer (whatever be the designation) shall also ensure that the mutual fund lite asset management company has adequate systems in place to ensure that the Code of Conduct for Fund Managers and Dealers specified in PART - B of the Fifth Schedule of these regulations are adhered to in letter and spirit. Any breach of the said Code of Conduct shall be brought to the attention of the board of directors of the mutual fund lite asset management company and trustees. (8) The Fund Managers (whatever be the designation) shall abide by the Code of Conduct for Fund Managers and Dealers specified in PART - B of the Fifth Schedule of these regulations and submit a quarterly self-certification to the trustees that they have complied with the said code of ....
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....e 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 lite in that company or its subsidiaries shall be brought to the notice of the trustees by the MF lite asset management company and be disclosed in the annual accounts of the respective schemes with justification for such investment provided the latter investment has been made within one year of the date of the former investment calculated on either side. (14) The mutual fund lite asset management company shall file with the trustees and the Board- (a) detailed bio-data of all its directors along with their interest in other companies within fifteen days of their appointment; (b) any change in the interests of directors every six months; and (c) a quarterly report to the trustees giving details and adequate justification about the purchase and sale of the securities of the group companies of the sponsor or the mutual fund lite asset management company, as the case may be, by the mutual fund lite during the said quarter. (15) Each director of the mutual fund lite asset manage....
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....; (iii) appointed auditors to audit its accounts; (iv) appointed a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications, guidelines, instructions, etc., issued by the Board or the Central Government and for redressal of investors grievances; (v) appointed a registrar to an issue and share transfer agent registered under the Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 and laid down parameters for their supervision; (vi) prepared a compliance manual and designed internal control mechanisms including internal audit systems; (vii) specified norms for empanelment of brokers and marketing agents; (viii) obtained, wherever required under these regulations, prior in principle approval from the recognized stock exchange(s) where units are proposed to be listed. (b) The board of directors of the mutual fund lite asset management company shall ensure that - (i) the mutual fund lite asset management company has been diligent in empanelling the brokers, in monitoring securities transactions w....
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....the schemes and shall not allow the mutual fund lite asset management company to float new schemes. (24) The Board of Directors of the mutual fund lite asset management company shall be responsible for the overall risk management of the mutual fund lite asset management company as well as the mutual fund lite schemes. (25) The independent directors of the mutual fund lite 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, (ii) service contracts with associates and whether the mutual fund lite asset management company has charged higher fees than outside contractors for the same services, (iii) selections of the mutual fund lite asset management company's independent directors, (iv) securities transactions involving associates to the extent such transactions are permitted, (v) selecting and nominating individuals to fill independent directors' vacancies, (vi) code of ethics must be designed to prevent fraudulent, deceptive or manipulative practices by insiders in connection w....
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....ransactions in securities. (32) The mutual fund lite asset management company shall establish, implement and maintain a documented whistle blower policy that shall - (a) provide for a confidential channel for employees, directors, trustees, and other stakeholders to raise concerns about suspected fraudulent, unfair or unethical practices, violations of regulatory or legal requirements or governance vulnerability, and (b) establish procedures to ensure adequate protection of the whistle blowers. (33) The board of directors of the mutual fund lite asset management company, including any of their committees, shall meet at such frequency as may be specified by the Board from time to time. (34) The board of directors of mutual fund lite asset management company shall furnish to the Board on a yearly basis, - (a) a report on the activities of the mutual fund lite; (b) a certificate stating that the board of directors of mutual fund lite asset management company have satisfied themselves that there have been no instances of self-dealing or front running by any of the trustees, directors and key personnel of the mutual fund lit....
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....ed in the Gazette of India on December 9, 1996 vide S.O. No. 856 (E). 2. The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 were subsequently amended- (1) On April 15, 1997 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 1997 vide S.O. No.327 (E). (2) On January 12, 1998 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 1998 vide S.O. No.32 (E). (3) On December 8, 1999 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 1999 vide S.O. No.1223 (E). (4) On March 14, 2000 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2000 vide S.O. No.235 (E). (5) On March 28, 2000 by the Securities and Exchange Board of India (Appeal to the Securities Appellate Tribunal) (Amendment) Regulations, 2000 vide S.O. No.278 (E). (6) On May 22, 2000 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2000 vide S.O. No.484 (E). (7) On January 23, 2001 by the Securities and Exchange Board of India (Mutual Funds)&nbs....
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....ndia (Mutual Funds) (Fifth Amendment) Regulations, 2006 vide F. No. SEBI/LAD/ DOP/83065/2006. (23) On May 28, 2007 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2007 vide F. No. 11/LC/GN/2007/2518. (24) On October 31, 2007 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2007 vide F. No. 11/LC/GN/2007/4646. (25) On March 31, 2008 by the Securities and Exchange Board of India (Payment of Fees) (Amendment) Regulations, 2008 vide F. No. 11/LC/GN/2008/21669. (26) On April 16, 2008 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2008 vide F. No. LADNRO/ GN/2008/03/123042. (27) On May 22, 2008 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2008 vide no. LADNRO/GN/2008/09/126202. (28) On September 29, 2008 by the Securities and Exchange Board of India (Mutual Funds) (Third Amendment) Regulations, 2008 vide No. LADNRO/ GN/2008/24/139426. (29) On April 8, 2009 by the Securities and Exchange Board of India (Mutual Funds)....
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....ide No. SEBI/LAD/NRO/GN/2016-17/031. (44) On March 13, 2018 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2018 vide No. SEBI/LAD-NRO/GN/2018/02. (45) On May 30, 2018 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2018 vide No. SEBI/LAD-NRO/GN/2018/14. (46) On December 6, 2018 by the Securities and Exchange Board of India (Mutual Funds) (Third Amendment) Regulations, 2018 vide No. SEBI/LAD-NRO/GN/2018/50. (47) On December 13, 2018 by the Securities and Exchange Board of India (Mutual Funds) (Fourth Amendment) Regulations, 2018 vide No. SEBI/LADNRO/ GN/2018/51. (48) On January 1, 2019 by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018 vide No. SEBI/LAD-NRO/GN/2019/01. (49) On April 26, 2019 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2019 vide No. SEBI/LAD-NRO/GN/2019/011. (50) On September 23, 2019 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2019 vide No. SE....