MUTUAL FUND – REGULATORY FRAMEWORK

MSOP

ICSI - CCGRT

MUTUAL FUND – REGULATORY FRAMEWORK

How Does Mutual

Fund Work

Structure of Mutual Fund

I. Sponsor / Settlor

II.Trust

III.Trustee

IV.AMC

V.R & T,

Custodian,

Types of Mutual Fund

Equity

ELSS

Money Market

Balanced

Board of Directors

No AMC Director can be a Director of Trustee Company.

50% of AMC Directors – Independent.

Minimum number of Trustee Directors – Four

No Trustee Director can be Trustee of any other Mutual Fund

2/3rd of Trustee Directors – Independent

Appoint Independent Dir in place of the resigning Dir within 3 months.

An associate director can be appointed as independent dir after cooling period of 3 yrs

MeetingsTrustee Meetings – Once in every two calendar months.

Key Reports before

Board of DirectorsSecurities transactions through brokers more than 5%

Networth of the AMC.

Investment by the schemes in a Company who has invested more than 5% in MF.

Dealing in Securities of Associate Companies

Inv in Unlisted and Privately placed Securities, Unrated Debt Securities, NPAs

Justifications for investment in the Bank Deposits

Holding/ minimum number of investors in the Schemes/ Plans of PMF.

Temporary breakdown in the time stamping machines

Inter Scheme Transfers

Status of Redressal of Investor Complains

Offer Document

It is known as Scheme Information Document & Statement of Additional Information and the format is prescribed by SEBI.

Similar like Prospectus prepared under Listing Requirements.

Key Contents of Offer Document:• Asset Allocation of the Scheme (Where will scheme invest)• Risk Factors• Offer Details•Benchmark•Fund Manager•Investment Restrictions•Penalties / Litigations•Due Diligence Certificate

• Filed with SEBI for approval. Once approved valid for 6 months

Dividend

Trustee have to approve quantum & record for periodical div ( like quarterly, half-yearly, yearly or interim dividends).

Within 1 calendar day of trustee approval Dividend Notice in Newspapers

The record date should be 5 calendar days from the issue of notice.

Notice ad in 10 size font and it is mandatory:a. To mention NAV of the scheme would fall to the extent of payout and stat levy b. That Proposed dividend be declared only in units i.e Rs. 4/- p.u and not 40% div.

Div Ad.pdf

Employee Dealing Regulations

Pre-clearance for access persons

Reporting in the specified format within 7 days from the date of transaction;

Minimum Holding Period of 30 days;

Fund should not have transacted during last 15 calendar days and

Trustee Directors have to report transaction above Rs. 1 lacs on Quarterly Basis.

AMC Directors have to report all transaction on quarterly basis.

Derivative Deals not allowed.

No front running or self dealing. No phones in dealing area / calls to be reviewed.

Any exceptions to be reported to Trustee & to SEBI. e-dealing.pdf

INVESTMENT RESTRICTIONS

Sr. Limit Description

1 A scheme shall not invest more than 15% of the NAV in rated debt instrument issued by a single issuer. The limit can be extended to 20% subject to prior approval of the Board of AMC and Trustee. The limit shall not be applicable for investment in government securities and money market instruments.

2 A scheme shall not invest more than 10% of its NAV in unrated debt instruments issued by a single issuer and total investments shall not exceed 25% of the NAV. Investments shall be made with the prior approval of the Board of AMC and Trustees.

3 No mutual fund under all its schemes should own more than ten per cent of any company's paid up capital carrying voting rights.

4. No Investment in; (a) any unlisted security of an associate or group company of the sponsor; or (b) any security issued by way of private placement by an associate or group company of the sponsor; or (c) the listed securities of group companies of the sponsor which is in excess of 25% of the net assets.

INVESTMENT RESTRICTIONS

Sr. Limit Description

5 A scheme shall not invest more than 15% of the NAV in rated debt instrument issued by a single issuer. The limit can be extended to 20% subject to prior approval of the Board of AMC and Trustee. The limit shall not be applicable for investment in government securities and money market instruments. MFUND.pdf

6 No mutual fund scheme shall invest more than 10% of its NAV in the equity shares or equity related instruments of any company. This limits is not applicable for Index Funds or sector or industry specific scheme.

7 A mutual fund scheme shall not invest more than 5% of its NAV in the unlisted equity shares or equity related instruments in case of open ended scheme and 10% of its NAV in case of close ended scheme.

8 Investment in overseas securities shall not exceed USD 300 million across all schemes. SEBI has enhanced the aggregate ceiling for overseas investment to USD 7 Billion.

SALES MATERIALS & ADVERTISEMENTS

All advertisements displaying returns/yields must disclose, immediately after the returns/yields and in the same font, that ‘Past performance may or may not be sustained in future’.

Only compounded annualised yield can be advertised if the scheme > 1 year. Annualised yields when used must be shown for last 1, 3 , 5 years and since launch of the scheme.

All performance advertisements shall also mention the returns on the benchmark indices, during the same time periods and should contain risk factors. Hoarding & Posters : Carry only the following statement “Mutual Fund investments are subject to market risks, read the offer document carefully before investing”. PLCFTo displayed in black letters of at least 8 inches height or covering 10% of the display area, on white background

No Celebrities shall form part of the Advertisement sachin - aviva1.jpg rahul - bob. jpg

SALES MATERIALS & ADVERTISEMENTS

Audio-Visual Media: The statement “Mutual Fund investments are subject to market risks, read all scheme related documents carefully”. shall be displayed on the screen for at least five seconds.W

USE OF RANKINGS: All advertisements containing a ranking must disclose in the main body of the advertisement that ‘Past performance is no guarantee of future results’ P

In the advertisement containing a ranking also disclose: Name of category (equity /debt), No. of Mutual Funds in the categoryLength of the period and the ending date.Criteria of Ranking.If any fees / expenses have been waived to affect the ranking.The publisher of ranking date.If a symbol is used (say ) then meaning of the symbol ( indicates fund is in top 30% of MF schemes)

Presentation by Ashutosh NaikCompany SecretaryPrincipal Pnb Asset Mngt Co. Pvt. Ltd.M:9833954093 PH:022-28892101