Mutual fund trustees must obtain the consent of existing unit holders on the basis of a simple majority.
The Securities and Exchange Board of India (SEBI), the market regulator, on Tuesday, December 28, took a major step to protect the interests of mutual fund investors. Under this, the consent of unitholders was made mandatory before closing a scheme for mutual funds. The decision was taken at a meeting of SEBI’s board of directors held on Tuesday.
SEBI said in a statement that whenever the trustees of a mutual fund decide to close a scheme or decide to finance units of a fixed term scheme (close-ended scheme) ahead of time, they are obliged to seek the consent of the unitholders. The decision has been made.
According to the statement, “The consent of the existing unit holders must be obtained on the basis of simple majority of the trustees. For this, voting will be done on the basis of one vote per unit. The result of the vote will have to be declared. Will be needed. “
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SEBI said that if the trustees fail to do so, the scheme should be opened for commercial activities from the second working day of the date of announcement of voting results.
In addition, SEBI has revised the accounting standards of the Mutual Fund Regulation. SEBI says that from FY 2023-24, it will now be mandatory for mutual funds to follow the Indian Accounting Standards (IND AS).
In the meantime, to enhance the role of KYC (Know Your Customer) Registration Agencies (KRAs), SEBI has decided to assign responsibility for independent verification by registered intermediaries (RIs) of KYC records uploaded to their ‘systems’.