Saturday, December 6, 2008

Mutual Fund Investors Maturity In Close Ended Schemes - Dec 06, 2008

The Securities and Exchange Board of India (SEBI) announced a new set of measures aiming at mutual funds industry, that all close-ended mutual fund schemes must be listed and that investors should not be allowed to exit from close-ended mutual fund schemes before their maturity. According to SEBI chief Mr Bhave, the schemes will also have to be amended accordingly. The board also decided that for such close-ended schemes, the underlying assets will not have a maturity beyond the date on which the scheme expires.

All such funds must invest in instruments in line with their maturity profile. Going ahead, the board has also approved extension of validity of observation letter issued for public or rights issues from the present three months to one year, subject to filing of updated document where there are material changes. Mr. Bhave has further informed that, many issuers requested SEBI to extend the present time limit of three months as they were unable to come out with their issues, which are already approved by SEBI.

The SEBI board has given green signal to approve certain policy measures pertaining to rights issue process, which includes enabling electronic rights entitlement, which can be traded electronically in stock exchanges; introducing alternative mode for making applications in rights issues, namely, applications supported by blocked amount (ASBA) mode; and mandating that the issuer can get access to rights issue proceeds only after the allotment is finalised.

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