Markets News

SEBI files a procedure to modify AMCs’ control

According to reports, markets regulator SEBI has filed for a procedure to modify asset management companies’ controlling interests.

Moreover, SEBI introduced guidelines for new sponsors of mutual funds.

Earlier, it relaxed the profitability criteria for qualifying as a mutual fund sponsor to facilitate innovation and augment the mutual funds sector.

Further, the regulator has launched additional benchmarks for standardisation of mutual fund schemes.

However, SEBI claimed to not make any change in the control of an AMC, without attaining prior approval of trustees.

Also, sending a written communication on the proposed change to each unit holder is a requirement.

Besides this, an advertisement in one English daily newspaper with nationwide circulation is a must.

Meanwhile, unit holders must have an option to exit on the prevailing Net Asset Value excluding any exit load.

The time period for this is not less than 30 calendar days from the date of communication.

An applicant has to apply for the regulator’s approval of acquiring an existing AMC.

This is in case the applicant is not an existing sponsor of a mutual fund registered with SEBI.

In fact, the new sponsor must issue an undertaking to the regulator and unit holders with complete responsibility of the management.

It includes administration of the schemes along with matters relating to the reconciliation of accounts.

Moving forward, the new sponsor will assume the trusteeship of the assets and liabilities of the schemes.

This comprises outstanding borrowings, unclaimed dividends and unclaimed redemptions besides taking responsibilities and obligations relating to investor grievances.

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