Mittal Court, B Wing, Gr. Floor,
224, Nariman Point, Mumbai 400 021

April 15, 1998
All Mutual Funds registered with SEBI/
All Asset Management Companies/
Unit Trust of India

Dear Sir,

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SEBI had a meeting with the Association of Mutual Funds in India (AMFI) on March 3, 1998. Based on the deliberations in the meeting, the following clarifications are being issued:

1.Sub-regulation (5) of Regulation 16 of the Securities and Exchange Board of India (Mutual Funds) Amendment Regulations, 1998, requires that two thirds of the trustees shall be independent persons and shall not be associated with the sponsors. All mutual funds who have 2/3rd independent trustees shall report to SEBI immediately. Other mutual funds who have yet to comply with this requirement shall take steps to reconstitute the Board of trustees and report to SEBI latest by April 30, 1998.

2. It shall be mandatory for the investors of mutual fund schemes to mention their bank account numbers in their applications/ requests for redemptions. For this purpose, mutual funds shall ensure to provide for space in the application forms.

3. The one time expenditure payable by the mutual funds to the depository may either be capitalised or may be included as part of recurring expenditure within the limits as permitted under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.

4.  Mutual funds had been advised earlier vide circular dated January 1, 1996, not to levy accounting fees to the schemes for the year 1995-96. The circular would not be applicable if accounting fees had already been charged to the schemes.
Yours faithfully,
Division Chief

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