INSUBCONTINENT EXCLUSIVE:
Permission of unit holders will be required before winding up a mutual fund schemeMumbai: Aiming to protect interests of mutual funds
financiers, the Securities and Exchange Board of India (SEBI) on Tuesday cleared the relocate to allow trustees of funds to obtain the
consent of unitholders if the majority of trustees decide to end up a scheme.As part of modifying the shared fund guidelines, the market
regulator will make it mandatory for the funds to follow Indian Accounting Standards (Ind AS) from 2023-24 onwards
The choice was taken in SEBI's board meeting.Mutual fund trustees will need to seek the permission of unitholders when most of trustees
decide to wind up a scheme or prematurely redeem the units of a close-ended plan, a statement provided by SEBI said
The trustees will have to acquire consent of the unitholders by simple majority of the unitholders present and ballot on the basis of one
vote per system held and publish the results of voting within 45 days of the publication of notice of circumstances leading to ending up,
it said.If trustees fail to acquire the approval, then the plan must be open for service activities from the second organization day after
publication of results of ballot, SEBI stated further.SEBI's move has come after the Supreme Court in July had held that the trustees are
required to look for the approval of bulk unit-holders for closing mutual fund schemes after releasing notice, disclosing reasons for their
choice to wind up of debt schemes.The Supreme Court's decision was available in the case on winding-up of Franklin Templeton Mutual Fund's 6
debt schemes.The fund home shut its 6 financial obligation mutual fund schemes on April 23, 2020, citing redemption pressures and lack of
liquidity in the bond market.The plans - Franklin India Low Duration Fund, Franklin India Dynamic Accrual Fund, Franklin India Credit Threat
Fund, Franklin India Short Term Earnings Strategy, Franklin India Ultra Short Mutual Fund, and Franklin India Income Opportunities Fund -
together had actually an estimated more than Rs 25,000 crore as possessions under management.Meanwhile, apart from the Ind AS requirements,
the regulator has chosen to modify the standards with respect to accounting-related regulatory provisions to remove redundant provisions and
to bring more clarity.Meanwhile, to enhance the function of KYC Registration Agencies (KRAs), the regulator has actually chosen to make them
accountable to carry out independent recognition of the KYC records uploaded onto their system by the Registered Intermediary (RI)
Such companies will have to maintain an audit trail of the upload/modification/download with respect to KYC records of customers
It has actually likewise been recommended that the systems of the RIs and KRAs should be integrated to help with smooth motion of KYC files
to and from RIs to KRAs, the statement said.
