MFD/CI R/9/230/2001
August 14, 2001
All Mutual Funds Registered with SEBI
Unit Trust of India (UTI)/ AMFI.
Dear Sirs,
1. Gazette Notification dated July 23, 2001
Please find enclosed a copy of the Gazette Notification dated July 23, 2001 for your information and implementation.
2. Investments by mutual funds in units of Venture Capital Funds or Shares of Venture Capital Companies
As you are aware, according to Clause 10 of the Seventh Schedule of the SEBI (Mutual Funds) Regulations, 1996, a mutual fund scheme can invest upto 10% of its NAV in the equity shares or equity related instruments of any company (with the exception for investments in index fund or sector or industry specific scheme). Further, Clause 11 provides that a mutual fund scheme can invest upto 5% of its NAV in the unlisted equity shares or equity related instruments in case of open ended scheme and upto 10% of its NAV in case of close ended scheme.
It is hereby clarified that within the above mentioned limits, mutual fund schemes can also invest in the listed or unlisted securities or units of venture capital funds, as the case may be.
3. Payment of Volatility margin by the Mutual Funds
In terms of SEBI Circular No. SMDRP/Policy/Cir-35/98 dated December 04,1998 issued to stock exchanges read with Press Releases PR 38/2001 and 38a/2001 both dated March 05, 2001, it is mandatory for all brokers to collect volatility margins on equity sales from their clients including institutional clients. Accordingly, all mutual funds are advised to pay applicable margins as directed by the stock exchanges. However, transactions for which early pay-in are effected do not attract the requirement of margin payment.
Yours faithfully,
P.K.Nagpal
CHIEF GENERAL MANAGER MUTUAL FUNDS DEPARTMENT
Encl. : Gazette Notificationdated July 23, 2001
Download full Text Of The Notification
