Same exit loads for all Mutual Fund (MF) holders irrespective of Subscription amounts, SEBI says

SEBI / IMD / CIR No. 6 /172445/ 2009 dated August 7, 2009 & SEBI / IMD / CIR No. 7 /173650 / 2009 dated August 17, 2009

It is observed that the mutual funds are making distinction between the unit
holders by charging differential exit loads based on the amount of subscription. In order to have parity among all classes of unit holders, it has now been decided that no distinction among unit holders should be made based on the amount of subscription while charging exit loads.

While complying with the aforesaid circular, it shall be ensured that:

1. The principle laid down in the SEBI circular No. SEBI/IMD/CIR No. 5/126096/08 dated May 23, 2008 (clause 16 of the standard observations) that “any imposition or enhancement in the load shall be applicable on prospective investments only” shall be followed.
2. The parity among all classes of unit holders in terms of charging exit load shall be made applicable at the portfolio level.

Further, you are aware that SEBI vide circular No. SEBI/IMD/CIR No. 5/126096/08 dated May 23, 2008 has simplified the formats for Offer Document and Key Information Memorandum of Mutual Funds Scheme [SEBI-Simplification of Offer Document and Key Information Memorandum of Mutual Funds Scheme]. The simplified Scheme Information Document format provides that “Wherever quantitative discounts are involved the following shall be disclosed – The Mutual Fund may charge the load within the stipulated limit of 7% and without any discrimination to any specific group of unit holders. However, any change at a later stage shall not affect the existing unit holders adversely”.