The Securities and Exchange Board of India (Sebi) on Tuesday said fund houses will have to launch additional plans as separate schemes for any ongoing open-ended scheme, other than dividend and growth plans, which differ from the main scheme in terms of portfolio or maturity.
“Some of the mutual funds have launched additional plans of different maturity periods as a part of existing schemes. The mutual fund advisory committee recommended that the additional plans being launched under the existing schemes, which have substantially different characteristics from the main scheme, shall not be launched as part of an ongoing open-ended scheme, and should be launched as separate schemes,” said the Sebi circular.
The new guidelines will be applicable to all the additional plans that have been launched in the past and the plans/schemes to be launched in the future as a part of existing schemes, unless the fund house obtains a confirmation from the regulator that the additional plans do not have substantially different characteristics from the existing schemes.
Besides, mutual funds will be liable to pay interest to investors at 15% per annum in the event of failure to despatch the redemption or repurchase proceeds.
“You are advised to ensure that the interest for the period of delay in despatch of repurchase/redemption warrants is added to the proceeds when such payments are made to the investors,” said the regulator.
In a bid to improve the standard of disclosures in advertisements through hoardings/ posters, Sebi said these statements should be displayed in black letters of at least 8 inches height or covering 10% of the display area on white background. Likewise, in ads through audio-visual media the statement will have to be displayed for at least 2 seconds. The regulator has also been receiving proposals from mutual funds for merger of schemes.
“Such consolidations shall be viewed as changes in fundamental attributes of the related schemes and the mutual funds shall comply with the requirements laid in the Sebi regulations,” said Sebi.
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