The new norm, to be applicable to the open-ended schemes, would come into effect immediately and would be adopted for the next 10 to 12 schemes on offer in future, so that the regulator could take a decision either to continue the new norms or to revert to old ones, after studying the impact of the decision on industry, Justice B G Deshmukh, who is heading the Sebi's Advisory Committee on Mutual Funds told The Financial Express here on Monday.

The committee has also taken a decision on the half-yearly disclosure of portfolios, treatment of unclaimed funds lying with mutual funds and the code of conduct for employees, particularly with reference to self dealing and front running in its meeting, while deferring a decision on structure of MFs on the lines of those existing in the US.

Earlier, Sebi has proposed to bring down the issue process period down to 42 to 50 days. But the committee has decided to bring down the offer period and time required for dispatch of units to 30 days each from 45 days and 42 days respectively, based on the industry's plea that it was difficult to process and despatch units to investors, most of whom subscribe at the last minute.

"It was also decided that MFs may start dispatching the units once the minimum subscription amount specified in the offer document is received, even before the closure of the issue," Mr Deshmukh said.

The committee has also firmed up a uniform format for all the funds for half-yearly disclosure of portfolios, even as some of the MFs have expressed difficulty in doing so. MF representatives were also not unanimous on the means of disclosure - either through press or informing the investors individually. "Sebi is committed to make it mandatory. In that direction the committee has the view that quarterly disclosure should be made mandatory in due course," Sebi executive director Ashok Kackar said.

Sebi panel also decided to use the proceeds accruing in the form of dividend or interest on unclaimed funds of investors after three years of their falling due, for educating investors, Sebi board member Prof J R Varma said.

"This norm would be applicable to the funds lying with MFs in during the last three years as well. Such funds are estimated at Rs 250 crore," he added.

However, the investor would be eligible for claiming the funds even after specified three year period, but his claim would be limited to further interest or dividend accrued on the funds up to three years from the day it has fallen due. It was also decided that unclaimed funds, transferred to separate accounts, should be invested in money market securities, he said.

The committee was also of the view that the MFs should follow minimum international standards for trading by their employees, so that there is no conflict of interest between the transactions of employees and the MF.

Care must also be taken to ensure that there was no front-running (employee personally going ahead of the fund with the latter's strategy and insider trading), Justice Deshmukh said.

It was also agreed to make it mandatory for all the closed-ended schemes to announce their Net Asset Value (NAV) on the same day of the week, so that investors could compare unlike on any day of the week as was being done now.

The final decision would be taken at next committee meeting on January 2001.Sebi would talk to the Insurance Regulatory Authority of India (IRAI) for introducing insurance cover to investors for the losses arising out of the acts of employees. Such cover is available for only directors of MFs now.

The panel has also prepared a negative list of accounts which could not be charged to the schemes by MFs. And further new accounts, if any, could be charged to the schemes with the approvals from Boards and trustees, though the Sebi keeps the right to reject such decisions.