Sebi makes unitholders’ consent mandatory for closure of MF schemes

The market regulator has made it mandatory for trustees of mutual funds to take unitholders’ consent ahead of winding-up/ closure of any scheme or prematurely redeeming the units of any close-ended scheme. Currently, trustees solely decide on the winding up or closure of a scheme.

“In case the trustees fail to obtain the consent, the scheme shall open for business activities from the second business day after publication of results of voting,” Sebi said. 
“In case the trustees fail to obtain the consent, the scheme shall open for business activities from the second business day after publication of results of voting,” Sebi said. 

The Securities and Exchange Board of India (Sebi) approved a series of amendments in its board meeting on Tuesday, including changes to mutual fund regulations. The market regulator has made it mandatory for trustees of mutual funds to take unitholders’ consent ahead of winding-up/ closure of any scheme or prematurely redeeming the units of any close-ended scheme. Currently, trustees solely decide on the winding up or closure of a scheme.

The market regulator on Tuesday said the consent shall be obtained with a simple majority with one vote per unit held. Results should be published within 45 days of the publication of notice of circumstances leading to winding up.  

“In case the trustees fail to obtain the consent, the scheme shall open for business activities from the second business day after publication of results of voting,” Sebi said. 

Earlier this year, the Supreme Court had announced that consent of unitholders should be made mandatory for the closure of mutual fund schemes. The court had ruled out the same during the case of Franklin Templeton Mutual Fund.

The regulator has also announced that mutual fund schemes will have to follow the Indian Accounting Standards from the beginning of financial year 2023-24. The watchdog also approved amendments to mutual fund regulations with respect to accounting-related regulatory provisions to remove redundant provisions and bring more clarity.

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