SECURITIES AND EXCHANGE BOARD OF INDIA
NOTIFICATION
Mumbai, the 25th January, 2022
SECURITIES AND EXCHANGE BOARD OF INDIA (MUTUAL FUNDS) (AMENDMENT) REGULATIONS, 2022
No. SEBI/LAD-NRO/GN/2022/70.—In exercise of the powers conferred by section 30 read with clause (c) of sub-section (2) of section 11 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following regulations to further amend the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, namely–
1. These Regulations may be called the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2022.
2. They shall come into force on the date of their publication in the Official Gazette:
Provided that the amendments to sub-regulation IV of regulation 3, sub-regulation VI of regulation 3, sub-clause (e) of clause (i) of sub-regulation VIII of regulation 3 and sub-clause (b) and (f) of clause (iii), sub-clause (b) and (c) of clause (iv) and clause (vi) of sub-regulation IX of regulation 3, shall come into force on April 1, 2023.
3. In the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996,–
I. clause (c) of sub-regulation (15) of regulation 18 shall be substituted with the following clause, namely,-
“(c) when the majority of the trustees decide to wind up a scheme in terms of clause (a) of sub regulation (2) of regulation 39 or prematurely redeem the units of a close ended scheme.”
II. in sub-regulation (2) of regulation 39, the words and symbol “may be wound up, after repaying the amount due to the unit holders” shall be substituted with the words “is to be wound up”.
III. sub-regulation (3) of regulation 39 shall be substituted as follows, namely –
“(3) Where a scheme is to be wound up under sub-regulation (2), the trustees shall give notice within one day, disclosing the circumstances leading to the winding up of the scheme, —
a) to the Board; and
b) in two daily newspapers having circulation all over India, a vernacular newspaper circulating at the place where the mutual fund is formed:
Provided that where a scheme is to be wound up under clause (a) of sub-regulation (2), the trustees shall obtain consent of the unit holders participating in the voting by simple majority on the basis of one vote per unit and publish the results of voting within forty five days from the publication of notice under sub-regulation (3):
Provided further that in case the trustees fail to obtain the required consent of the unitholders under clause (a) of sub-regulation (2), the schemes shall be reopened for business activities from the second business day after publication of results of the voting.”
IV. after sub-regulation (1) of regulation 50, the following sub-regulation shall be inserted, namely, –
“(1A) The financial statements and accounts of the mutual fund schemes shall be prepared in accordance with Indian Accounting Standards (IND AS) and any addendum thereto, as notified by the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time:
Provided that in case there is any conflict between the requirements of IND AS and these regulations and guidelines issued thereunder, the asset management companies shall follow the requirements specified under these regulations.”
V. in sub-regulation (3) of regulation 50, after the words “Ninth Schedule” and before the words “so as to”, the words and symbol “and as specified by the Board from time to time,” shall be inserted.
VI. clause (a) of sub-regulation (6A) of regulation 52, shall be substituted with the following, namely,-
“(a) brokerage and transaction costs which are incurred for the purpose of execution of trade up to 0.12 per cent of trade value in case of cash market transactions and 0.05 per cent of trade value in case of derivatives transactions;”
VII. regulation 54 shall be substituted with the following, namely,-
“(54) Every mutual fund or the asset management company shall prepare in respect of each financial year, an annual report and annual financial statements of the schemes as specified in the Eleventh Schedule and as specified by the Board from time to time.”
VIII. in Ninth Schedule,
i. In Part A
a. clause (a) shall be substituted with the following, namely,-
“(a) For the purposes of the financial statements, mutual funds shall mark all investments to market and carry investments in the balance sheet at market value. The realised gains or losses on sale or redemption of investment, as well as unrealised appreciation or depreciation shall be recognised in all financial statements through Revenue Accounts. However, since the unrealised gain arising out of appreciation on investments cannot be distributed, provision has to be made for exclusion of this item when arriving at distributable income.”
b. in clause (d), after the word and symbol “the “” and before the word “average”, the word “weighted” shall be inserted.
c. in clause (i), the existing clause shall be numbered as sub-clause (1).
d. after sub-clause (1) of clause (i), the following sub-clause shall be inserted, namely,-
“(2) The Trustees may, if necessary, transfer a portion of the distributable profits to a dividend equalization reserve. Such a transfer would be independent of the requirement to operate an Equalization Account as provided in (i)(1).”
e. clause (k) shall be substituted with the following, namely,-
“(k). The investments acquired or sold shall be accounted at transaction price excluding all transaction costs such as brokerage, stamp charges and any charge customarily included in the broker’s contract note that are attributable to acquisition/sale of investments.”
f. clause (m) shall be substituted with the following, namely,-
“(m) Non-traded investments shall be valued in good faith in accordance with the norms specified in the Eighth Schedule:
Provided that in the case of real estate mutual funds schemes, investments in unlisted equity shares shall be valued as per the norms specified by the Board in this regard.”
IX. in Eleventh Schedule
vii. clause (vi) of para 1 shall be substituted with the following, namely,-
“(vi) Statement on the following lines:
On written request, present and prospective unitholders/investors can obtain a physical copy of the trust deed, the annual report and scheme related documents at a nominal price.”
viii. in para 2,
a. clause (a) shall be substituted with the following clause, namely,-
“(a) For investments in securities- The accounting policies given in Part A of the Ninth Schedule shall be followed.”
b. sub-clause (i) of clause (b) shall be substituted with the following, namely,-
“(i) The accounting policies given in Part A of the Ninth Schedule in respect of investment in securities;”
iii. in para 3,
a. in clause (i), after the words “and liabilities” and before the words and symbol. “These particulars”, the words “in the format specified by the Board” shall be inserted.
b. in clause (i), the words and symbol “These particulars shall contain information enumerated in Annexures 1A and 1B hereto” shall be omitted.
c. clause (ii) shall be substituted with the following, namely,-
“(ii) The aggregate market value of investments in securities shall be stated separately in respect of each type of investment, such as equity shares, preference shares, convertible debentures listed on recognised stock exchange, non-convertible debentures or bonds further differentiating between those listed on recognised stock exchange and those privately placed.”.
d. in sub-clause (f) of clause (vii) (A), the words “average weekly net asset value” shall be substituted with the words “average net asset”.
e. sub-clause (g) of clause (vii)(A) shall be substituted with the following, namely,-
“(g) In case of securities, excluding debt securities, where the non-traded investments which have been valued “in good faith” exceed 5% of the net assets at the end of the year, the aggregate value of such investments along with percentage to net assets.
In case of debt securities which have been valued at a price other than the price given by the Independent Valuation Agencies at the end of year, the aggregate value of such securities and percentage to net assets; and”
f. sub-clause (j) of clause (vii)(A) shall be substituted with the following clause, namely,-
“(j) The total income of the scheme shall include unrealised depreciation or appreciation on investment.”
iv. in para 4,
a. in clause (i), after the words “surplus of the mutual fund”, and before the words, “These particulars” the words “in the format specified by the Board” shall be inserted.
b. in clause (i), the words, symbol and number “These particulars shall contain information enumerated in Annexure 2 of this Schedule.” shall be omitted
c. clause (iv) shall be omitted.
d. in sub-clause (b) of clause (v)(A), the word “net” shall be substituted with the word “gross ”.
e. in sub-clause (d) of clause (v)(A), the word “weekly” shall be substituted with the word “daily”.
v. para 6 shall be substituted with the following, namely,-
“(6) Perspective historical per unit statistics
(1) This statement shall disclose the following schemewise per unit statistics for the past 3 years:
(a) net assets value, per unit at plan/option level;
(b) gross income per-unit broken up into the following components:
(i) income other than profit(loss) on sale of investment, per unit;
(ii) income from profit(loss) on inter-scheme sales/transfer of investment, per unit;
(iii) income from profit(loss) on sale of investment to third party, per unit;
(iv) transfer to revenue account from past year’s reserve, per unit.
(v) gross income – sum of b(i),(ii) and (iii)
(c) aggregate of expenses, write off, amortisation and charges, per unit;
(d) net income, per unit (gross income – aggregate of expenses);
(e) unrealised appreciation/depreciation in value of investments, per unit;
(f) if the units are traded, the highest and the lowest prices per unit during the year;
(g) ratio of expenses to average net assets by percentage;
(h) ratio of gross income to average net assets by percentage (excluding transfer to revenue account from past year’s reserve but including unrealised appreciation on investments);
(i) the highest and the lowest NAV per unit during the year at plan/option level;
(j) face value per unit;
(k) total unit capital (in Rupees);
(l) average Net asset (in Rupees);
(m) no. of days;
(n) Weighted average Price Earnings Ratio of equity/equity related instruments held as at end of year/period.”
vi. Annexures 1A, 1B and 2 shall be omitted.
X. in Twelfth Schedule,
i. Sl. No 6.1 shall be substituted with the following, namely,-
“(6.1) Expenses
– Commission
– Other Expenses”
ii. in Sl. No 6.5, after the word “assets” the words “at plan level” shall be inserted.
iii. clause 6 of Notes shall be omitted.
AJAY TYAGI, Chairman
[ADVT.-III/4/Exty./606/2021-22]
Footnote:
1. The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, the Principal Regulations, were published in the Gazette of India on December 9, 1996 vide S.O. No. 856 (E).
2. The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 were subsequently amended–
(1) On April 15, 1997 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 1997 vide S.O. No.327 (E).
(2) On January 12, 1998 by the Securities and Exchange Board of India (Mutual Funds)(Amendment) Regulations, 1998 vide S.O. No.32 (E).
(3) On December 8, 1999 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 1999 vide S.O. No.1223 (E).
(4) On March 14, 2000 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2000 vide S.O. No.235 (E).
(5) On March 28, 2000 by the Securities and Exchange Board of India (Appeal to the Securities Appellate Tribunal) (Amendment) Regulations, 2000 vide S.O. No.278 (E).
(6) On May 22, 2000 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2000 vide S.O. No.484 (E).
(7) On January 23, 2001 by the Securities and Exchange Board of India (Mutual Funds)(Amendment) Regulations, 2001 vide S.O. No.69 (E).
(8) On May 29, 2001 by the Securities and Exchange Board of India (Investment Advice by Intermediaries) (Amendment) Regulations, 2001 vide S.O. No.476 (E).
(9) On July 23, 2001 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2001 vide S.O. No.698 (E).
(10) On February 20, 2002 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2002 vide S.O. No.219 (E).
(11) On June 11, 2002 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2002 vide S.O. No.625 (E).
(12) On July 30, 2002 by the Securities and Exchange Board of India (Mutual Funds) (Third Amendment) Regulations, 2002 vide S.O. No.809 (E).
(13) On September 9, 2002 by the Securities and Exchange Board of India (Mutual Funds) (Fourth Amendment) Regulations, 2002 vide S.O. No.956 (E).
(14) On September 27, 2002 by the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 vide S.O. No.1045 (E).
(15) On May 29, 2003 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2003 vide S.O. No. 632 (E).
(16) On January 12, 2004 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2004 vide F.No. SEBI/LAD/DOP/4/2004.
(18) On January 12, 2006 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2006 vide S.O. No. 38 (E).
(19) On May 22, 2006 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2006 vide S.O. No. 783 (E).
(21) On December 27, 2006 by the Securities and Exchange Board of India (Mutual Funds) (Fourth Amendment) Regulations, 2006 vide F. No. SEBI/LAD/DOP/82534/2006.
(22) On December 27, 2006 by the Securities and Exchange Board of India (Mutual Funds) (Fifth Amendment) Regulations, 2006 vide F. No. SEBI/LAD/DOP/83065/2006.
(28) On September 29, 2008 by the Securities and Exchange Board of India (Mutual Funds) (Third Amendment) Regulations, 2008 vide No. LADNRO/ GN/2008/24/139426.
(38) On 6 May, 2014 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2014 vide No. LAD-NRO/GN/2014-15/01/1039.
(40) On 30 December, 2014 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2014 vide No. LAD-NRO/GN/2014-15/19/1973.
(51) On 6 March, 2020 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2020 vide No. SEBI/LAD-NRO/GN/2020/07.
(57) On 9 November, 2021 by the Securities and Exchange Board of India (Mutual Funds) (Third Amendment) Regulations, 2021 vide No. SEBI/LAD-NRO/GN/2021/56.
