Scheme open time & money back NFO
Service Standards Mandated for a Mutual Fund towards its
Investors
Schemes other than ELSS can remain open for subscription for a
maximum of Fifteen (15) days.
In the case of schemes, the offering period shall not be more than thirty
(30) days.
Schemes, other than ELSS, need to allot units or refund money within 5
business days of closure of the NFO.
If the minimum amount required to operate the scheme is not collected from
NFO then the money has to be returned in SIX Weeks. In the event of
delays in refunds, dividend warrants or redemption/repurchase cheques,
investors need to be paid interest at the rate of 15% p.a. for the period of
the delay. This interest cannot be charged to the scheme.
Open-ended schemes, other than ELSS, have to re-open for ongoing sale /
re-purchase within 5 business days of allotment.
Statement of accounts
Statement of accounts are to be sent to investors as follows:
In the case of NFO
Post-NFO investment
In the case of SIP / STP / SWP
Initial transaction
Ongoing
On specific request
Within 5 business days of closure
of the NFO
Within 5 working days from the day
of receiving the request
within 10 working days
once every calendar quarter
(Mar,June,Sept,Dec) within 10 working
days of the end of the quarter
Within 5 working days
Statement of accounts are to be sent to investors as follows:
Statement of Account shall also be sent to dormant investors
also i.e. investors who have not transacted during the previous
6 months.
If mandated by the investor, a soft copy shall be e-mailed to
investor every month.
If a Unit-holder asks Unit Certificates, the AMC is bound to
issue the Unit Certificate within 5 working days of receipt of
request.
Dividend warrants have to be dispatched to investors within 30
days of declaration of the dividend.
Redemption / re-purchase cheques would need to be
dispatched to investors within 10 working days from the date of
receipt of the transaction request.
NAV
NAV has to be published daily, in at least 2 daily
newspapers having circulation all over India.
NAV and re-purchase price are to be updated in the
website of AMFI and the mutual fund
In the case of Fund of Funds, by 10 am the following day
In the case of other schemes, by 9 pm the same day
The investor/s can appoint up to 3 nominees, who will be
entitled to the Units in the event of the demise of the
investor/s.
The investor can also pledge the units. (take the loan against mutual fund)
Other Rights of Investors
Investors can choose to change their distributor or go direct without insisting
on any kind of No Objection Certificate from the existing distributor.
Investors can choose to hold the Units in dematerialized form.
In the case of unit-holding in demat form, the demat statement given by the
Depository Participant would be treated as compliance with the requirement
of Statement of Account.
The mutual fund has to publish complete statement of the scheme portfolio
and the half-yearly unaudited financial results within 1 month from the close
of each half year in one National English daily, and one newspaper
published in the language of the region where the head office of the mutual
fund is situated.
Debt-oriented, close-ended / interval, schemes /plans need to disclose their
portfolio in their website every month, by the 3rd working day of the
succeeding month.
Annual Report
SEBI has prescribed a detailed format for annual reporting on redressal of
complaints received against the mutual fund.
The mutual fund has to report on the number of complaints, the time period in
which they were resolved, and if not resolved, for how long they remain unresolved.
Scheme-wise Annual Report or an abridged summary has to be mailed to all unitholders
within 6 months of the close of the financial year. The Annual Report of the
AMC has to be displayed on the website of the mutual fund.
Consolidated Account Statement
Consolidated Account Statement is also issued to investors. This statement provides
information in terms of name of schemes where the investor has invested, number of
units held and its market value. Each CAS issued to the investor also provides the
total purchase cost/cost of investment in each scheme. The CAS issued for half year
(September/March) shall also provide:
The amount of actual commission paid by AMCs/Mutual Funds to distributors
The schemes average total expense ratio
Investor Redressal
In the event of any issue with the AMC or scheme, the investor can first
approach the investor service centre. If the issue is not redressed, even after
taking it up at senior levels in the AMC, then the investor can write to SEBI with
the details.
The offer document has details of the number of complaints received and their
disposal. Pending investor complaints can be a ground for SEBI to refuse
permission to the AMC to launch new schemes.
The Trustees / AMC cannot make any change in the fundamental
attributes of a scheme, unless
A written communication about the proposed change is sent to each
Unit-holder, and an advertisement is issued in an English daily
Newspaper having nationwide circulation, and in a newspaper
published in the language of the region where the HO of the MF.
Dissenting unit-holders are given the option to exit at the prevailing
Net Asset Value, without any exit load. This exit window has to be
open for at least 30 days.
The appointment of the AMC for a mutual fund can be
terminated by a majority of the trustees or by 75% of the Unitholders
(in practice, Unit-holding) of the Scheme.
75% of the Unit-holders (in practice, Unit-holding) can pass a
resolution to wind-up a scheme.
The Trustees are bound to obtain consent of the Unit-holders:
Whenever required to do so by SEBI, in the interest of the Unitholders
Whenever required to do so by 75% of the Unit-holders (in practice,
Unit-holding) of the scheme
When the trustees decide to wind-up or prematurely redeem the
scheme
Consolidation of Schemes
Merger or consolidation of schemes is not considered a change in the
fundamental attribute of the surviving scheme if:
There is no other change in the Fundamental attributes of the surviving
scheme i.e. the scheme which remains in existence after the merger.
Mutual Funds are able to demonstrate that the circumstances merit merger or
consolidation of schemes and the interest of the unit holders of surviving
scheme is not adversely affected.
After approval by the Boards of AMCs and Trustees, the mutual funds shall file
such proposal with SEBI. SEBI would communicate its observations on the
proposal within the time period prescribed.
The letter to unitholders shall be issued only after the final observations
communicated by SEBI have been incorporated and final copies of the same
have been filed with SEBI
limitations of investor
If an investor feels that the trustees have not fulfilled his
obligations, then he can file a suit against the trustees for
breach of trust but cannot sue the Trust.
The principle of caveat emptor (let the buyer beware) applies
to mutual fund investments.
No legal protection on the grounds of not being aware.
A proposed investor i.e. someone who has not invested in the
scheme does not have rights to proceed against the AMC or
trustees.
Investors in MF can not get protection under the Companies Act,
2013.
UNCLAIMED AMOUNTS
The mutual fund has to deploy unclaimed dividend and
redemption amounts in the money market.
AMC can recover investment management and advisory fees
on the management of these unclaimed amounts, at a maximum
rate of 0.50% p.a.
Recovery of such unclaimed amounts by the investors is as
follows:
If the investor claims the money within 3 years, then payment
is based on prevailing NAV i.e. after adding the income
earned on the unclaimed money.
If the investor claims the money after 3 years, then payment
is based on the NAV at the end of 3 years.
PROCEEDS OF ILLIQUID SECURITIES
If the amounts are substantial and recovered within 2 years,
then the amount is to be paid to the old investors
In other cases, the amount is to be transferred to the Investor
Education Fund maintained by each mutual fund.
Statement of accounts are to be sent to investors as follows:
· In the case of NFO – Within 5 business days of closure of the NFO (15 days for RGESS)
· Post-NFO investment – Within 10 working days of the investment
· In the case of SIP / STP / SWP
1) Initial transaction – within 10 working days
2) Ongoing – Once every calendar quarter (March, June, September, December) within 10 working days of the end of the
quarter
3) On specific request – Within 5 working days without any cost.
· Statement of Account shall also be sent to dormant investors i.e. investors who have not transacted during the
previous 6 months.
· If mandated by the investor, soft copy shall be e-mailed to the investor every month.
· If a Unit-holder asks for Unit Certificates, the AMC is bound to issue the Unit Certificate within 5 working days of the
receipt of request (15 days for RGESS).
· Dividend warrants have to be dispatched to investors within 30 days of declaration of dividend.
· Redemption / re-purchase cheques would need to be dispatched to investors within 10 working days from the date of
receipt of transaction request.
· NAV has to be published daily, in at least 2 daily newspapers having circulation all over India.
· NAV and re-purchase price are to be updated in AMFI website and the mutual fund website,
1) In the case of other schemes, by 9 pm the same day.
2) In the case of Fund of Funds, by 10 am the following day.
· The investor/s can appoint up to 3 nominees, who will be entitled to the Units in the event of the demise of the
investor/s.
· The investor can also pledge units.
· The Trustees / AMC cannot make any change in the fundamental attributes of a scheme, unless:
1) A written communication about the proposed change is sent to each Unit-holder, and anadvertisement is issued in an
English daily Newspaper having nationwide circulation, and in a newspaper published in the language of the region where the
head office of the mutual fund is located.
2) Dissenting unit-holders are given the option to exit at the prevailing Net Asset Value, without any exit load. This exit
window has to be open for at least 30 days.
· The appointment of the AMC for a mutual fund can be terminated by a majority of the trustees or by 75% of the
Unitholders (in practice, Unit-holding) of the Scheme.
· 75% of the Unit-holders (in practice, Unit-holding) can pass a resolution to wind-up a scheme.
· The Trustees are bound to obtain consent of the Unit-holders:
1) Whenever required to do so by SEBI, in the interest of the Unitholders
2) Whenever required to do so by 75% of the Unit-holders (in practice, Unit-holding) of thescheme
3) When the trustees decide to wind-up or prematurely redeem the scheme
· The principle of caveat emptor (let the buyer beware) applies to mutual fund investments.
· The mutual fund has to deploy unclaimed dividend and redemption amounts in the money market.
· AMC can recover investment management and advisory fee on management of these unclaimed amounts, at a
maximum rate of 0.50% p.a.
· Recovery of such unclaimed amounts by the investors is as follows:
1) If the investor claims the money within 3 years, then payment is based on prevailing NAVi.e. after adding the
income earned on the unclaimed money.
2) If the investor claims the money after 3 years, then payment is based on the NAV at theend of 3 years.
· PROCEEDS OF ILLIQUID SECURITIES
1) If the amounts are substantial, and recovered within 2 years, then the amount is to be paidto the old investors.
2) In other cases, the amount is to be transferred to the Investor Education Fund maintainedby each mutual fund.
· Consolidated Account Statement is also issued to investors. This statement provides information in terms of name of
schemes where the investor has invested, number of units held and its market value. Each CAS issued to the investor
also provides the total purchase cost/cost of investment in each scheme. The CAS issued for half year
(September/March) shall also provide:
a) The amount of actual commission paid by AMCs/Mutual Funds to distributors (in absoluteterms) during the half-year
period against the concerned investor’s total investments in each MFscheme.
b) The schemes average Total expense ratio (in percentage terms) for the half year period for each scheme’s applicable plan
(regular, direct or both) where the concerned investor has actually invested in.
Such half yearly CAS shall be issued to all MF investors, excluding those investors who do not have any holdings in MF
schemes and where no commission against their investment has been paid to distributors, during the concerned half-year
period.
