Transmission or Transposition & death of Joint holder of shares mandates PAN for listed companies & for mismatch or maiden name for married woman, a proof of identity or address to be submitted for corroborative evidence to RTA

SEBI/MRD/DoP/SE/RTA/Cir-03/2010 dated 7th January, 2010

Sub: PAN requirement for transmission of shares in physical form
The Securities and Exchange Board of India (SEBI) vide circular ref. no. MRD/DoP/Cir-05/2007 dated April 27, 2007 made PAN mandatory for all securities market transactions. Thereafter, vide circular no. MRD/DoP/ Cir-05/2009 dated May 20, 2009 it was clarified that for securities market transactions and off-market/ private transactions involving transfer of shares in physical form of listed companies, it shall be mandatory for the transferee(s) to furnish copy of PAN card to the Company/ RTAs for registration of such transfer of shares.

Based on representations/ clarifications sought by market participants and in continuation to the aforesaid circulars, it is hereby clarified that it shall be mandatory to furnish a copy of PAN in the following cases –

1. Deletion of name of the deceased shareholder(s), where the shares are held in the name of two or more shareholders (Joint Shareholdings).
2. Transmission of shares to the legal heir(s), where deceased shareholder was the sole holder of shares.
3. Transposition of shares – when there is a change in the order of
   names in which physical shares are held jointly in the names of two or
   more shareholders.

Incase of mismatch in PAN card details as well as difference in maiden name and current name (in case of married women) of the investors -

• The Registrar & Transfer Agents (RTAs) can collect the PAN card as submitted by the transferee(s).  However, this would be subject to the RTAs verifying the veracity of the claim of such transferee(s) by collecting sufficient documentary evidence in support of the identity of the transferee(s) as provided for at para. 2 in the SEBI circular no. MRD/DoP/Dep/Cir-29/2004 dated August 24, 2004 (ie) based on proof of identity or proof of address documents as given below:

• (ie) A copy of any one of the following may be accepted for proof  of identity / proof of address:

  A.  Proof of Identity

  I. Passport
  II. Voter ID Card
  III. Driving license
  IV. PAN card with photograph
  V. MAPIN card
  VI. Identity card/document with applicant's Photo, issued by

  a) Central/State Government and its Departments,
  b) Statutory/Regulatory Authorities,
  c) Public Sector Undertakings,
  d) Scheduled Commercial Banks,
  e) Public Financial Institutions,
  f) Colleges affiliated to Universities,
  g) Professional Bodies such as ICAI, ICWAI, ICSI, Bar Council etc., to their Members; and
  h) Credit cards/Debit cards issued by Banks.

  B.  Proof of Address

  I. Ration card
  II. Passport
  III. Voter ID Card
  IV. Driving license
  V. Bank passbook
  VI. Verified copies of

  a) Electricity bills (not more than two months old),
  b) Residence Telephone bills (not more than two months old) and
  c) Leave and License agreement / Agreement for sale.

  VII. Self-declaration by High Court & Supreme Court judges, giving the new address in respect of their own accounts.
  VIII. Identity card/document with address,  issued by

  a) Central/State Government and its Departments,
  b) Statutory/Regulatory Authorities,
  c) Public Sector Undertakings,
  d) Scheduled Commercial Banks,
  e) Public Financial Institutions,
  f) Colleges affiliated to universities; and
  g) Professional Bodies such as ICAI, ICWAI, Bar Council etc., to their Members.

• read with SEBI circular no. MRD/DoP/Cir-08/2007 dated June 25, 2007.  It details the discontinuation with respect to the requirement of Unique Identification Number (UIN) under the SEBI (Central Database of market Participants Regulations), 2003 (MAPIN regulations)/circulars and to make PAN as the sole identification number for all participants in the securities market, irrespective of the amount of transaction.

Revision in lot size for derivative contracts in individual securities mandates 2 week notice by Stock Exchanges & any increase in lot size can only be prospective

The Stock Exchanges shall review the lot size for derivative contracts on individual securities once in every 6 months based on the average of the closing price of the underlying for last 1 month and wherever warranted, revise the lot size by giving an advance notice of atleast 2 weeks to the market.

If the revised lot size is higher than the existing one, it will be effective for only new contracts. In case of corporate action, the revision in lot size of existing contracts shall be carried out as per SEBI circular SMDRP/DC/CIR-15/02 dated December 18, 2002.

 

Click here for the Standardised Derivative Lots size based on the Price Band of the Individual Securities as per SEBI/DNPD/Cir- 50/2010 dated 8th January 2010

Contracts under Securities Lending & Borrowing (SLB) framework extended to 12 months, SEBI

Sub: Review of Securities Lending and Borrowing (SLB) Framework
The framework for SLB was specified vide circular no. MRD/DoP/SE/Dep/Cir- 14 /2007 dated December 20, 2007 and was operationalised with effect from April 21, 2008. The SLB framework was revised vide circular no. MRD/DoP/SE/Cir-31/2008 dated October 31, 2008. Pursuant to feedback received from market participants and proposals for revision of SLB received from NSE and BSE, the framework is now modified as under:

The tenure of contracts in SLB may be upto a maximum period of 12 months. The Approved Intermediary (Clearing corporation/ Clearing House) shall have the flexibility to decide the tenure (maximum period of 12 months).

For more details, visit SEBI/MRD/DoP/SE/Dep/Cir- 01 /2010 dated 6th January 2010.

Internal Audit made mandatory for another intermediary, the Credit Rating Agencies (CRA) by PCS or PCA or PCWA on half yearly basis within 2 months to Board of Directors & ATR to SEBI

SEBI/MIRSD/CRA/Cir-01/2010 dated 6th January 2010

SEBI has decided in consultation with the credit rating agencies (CRAs)  that the audit envisaged under Regulation 22 of the SEBI (Credit Rating Regulations), 1999 shall include an internal audit (similar to that of Stock Brokers & Clearing Members by CA’s) to be undertaken in the following manner:

a. It shall be conducted on a half yearly basis.
b. It shall be conducted by Chartered Accountants, Company Secretaries (PCS) or Cost and Management Accountants who are in practice and who do not have any conflict of interest with the CRA.
c. It shall cover all aspects of CRA operations and procedures, including investor grievance redressal mechanism, compliance with the requirements stipulated in the SEBI Act, Rules and Regulations made thereunder, and guidelines issued by SEBI from time to time.
d. The report shall state the methodology adopted, deficiencies observed, and consideration of response of the management on the deficiencies.
e. The report shall include a summary of operations and of the audit, covering the size of operations, number of transactions audited and the
number of instances where violations / deviations were observed while making observations on the compliance of any regulatory requirement.
f. The report shall comment on the adequacy of systems adopted by the CRA for compliance with the requirements of regulations and guidelines issued by SEBI and investor grievance redressal.

The time schedule for the internal audit shall be as under:
a. The CRA shall receive the report of the internal audit within 2 months from the end of the half-year.
b. The Board of Directors of the CRA shall consider the report and take steps to rectify the deficiencies, if any, and the CRA shall send an Action Taken Report (ATR) to SEBI within next 2 months.

It is clarified that for the half-year October 2009 - March 2010, the CRA shall receive the report of the internal audit by May 31, 2010. Its Board of Directors shall consider the report and take appropriate measures to rectify the deficiencies and the CRA shall send the Action Taken Report to SEBI by July 31, 2010.

Download all Press Notes from 1991 to 2009 issued by DIPP as it proposes to consolidate PNs in 2010 to release a comprehensive FDI policy in India like Master Circulars with a sunset clause of 6 months

Draft Master Press Note with FDI Regulatory Framework

The Legal basis: Foreign Direct Investments (FDI) by non-resident (NRI) in resident entities through transfer or issue of security to person resident outside India (PROI) is a ‘Capital account transaction’ and Government of India and Reserve bank of India (RBI) regulate this under the FEMA 1999 and its various regulations. Keeping in view the current requirements, the Government comes up from time to time with new regulation, amends/changes in existing one through order/allied rules, Press Notes, etc. . The regulatory framework over a period of time thus consists of Acts, Regulations, Press Notes, Press Releases, Clarifications, etc.

This draft Press Note consolidates into one document all the prior regulations on FDI and reflects the current ‘regulatory framework’ on FDI. It is clarified that this is a consolidation/compilation and comprehensive listing of most matters on FDI and is not intended to make changes in the extant regulations. While attempt has been made to deal with the subject comprehensively, if some aspect(s) has been left out then that will continue to be dealt in the current way where it is listed.

It is the intent and objective of the Government to have a regulatory framework which is transparent, predictable, understandable, simple and clear to reduce the regulatory burden and promote foreign direct investment. The new system of continuous consolidation and updation is primarily evinced as a measure of investor and investment friendliness.

This Press Note will have a sunset clause of 6 months and will automatically lapse on 30th September, 2010. A new press Note on Regulatory Framework would be issued every six months which will incorporate and reflect all the changes in the regulations during the last intervening period of 6 months. Thus the Government will issue Press Note on FDI Regulatory Framework twice a year in April and October which would be the current regulatory framework on that date.

All earlier Press Notes on FDI issued by Department of Industrial Policy and Promotion (DIPP), Government of India stand rescinded.

Notwithstanding the rescindment of earlier Press Notes, anything done or any action taken or purported to have been done or taken under the resinded Press Notes shall in so far as it is not inconsistent with this Press Note be deemed to have been done or taken under the corresponding provisions of this Press Note.

Download all Press Notes issued by DIPP from 1991 to 2009 here

Foreign Investment in Commodity Exchanges to be diluted on or before 31st March 2010 – PN 7 issued by DIPP

Press Note 7 of 2009 vide D/o IPP F.No. 12(58)/2005-FC dated 26.09.2009

Difficulties have been brought to the notice of the government in complying with the provisions of the earlier Press Notes within the stipulated time frame by Commodity Exchanges in India. The Government, on consideration and in order to facilitate the existing Commodity Exchanges to comply with the guidelines notified vide Press Note 2 (2008), has now decided to allow a further transition / complying/correction time to the existing Commodity exchange(s) beyond 30.09.2009. Accordingly, all such Commodity Exchanges are hereby advised to adhere to the conditions of Press Note 2 (2008) by 31.03.2010. This would comprise the last opportunity for such compliance.

All Commodity Exchanges shall furnish a status report informing the foreign investment in the Commodity Exchange as on 30.09.2009, along with details of equity structure, as well as the steps already taken/proposed to be taken with regard to compliance with the guidelines notified vide Press Note 2(2008), to the Department of Industrial Policy & Promotion (DIPP), Department of Consumer Affairs, Foreign Investment Promotion Board (FIPB), the Forward Market Commission (FMC) and SEBI.

No limits for royalty/lumpsum payment in FEMA under Current Account Transaction as per PN 8 – DIPP allowed it under Automatic route (ie) without the approval of RBI

Press Note 8 of 2009 as notified by 0/0 IPP F. No. 5(6)/2008-FC dated 16.12.2009

The existing policy of Government of India on the payment of royalties under Foreign Technology Collaboration provides for automatic approval for foreign technology transfers involving payment of lumpsum fee of US$ 2 million and payment of royalty of 5% on domestic sales and 8% on exports. In addition, where there is no technology transfer involved, royalty up to 2% for exports and 1% for domestic sales is allowed under automatic route on use of trademarks and brand names of the foreign collaborator. Separate norms are available for the hotel sector vide Press Note 18 (1991 Series) and Press Note 1 (1995 Series). Technology transfers involving payments above these limits required prior permission of the Government of India (Project Approval Board, Department of Industrial Policy and Promotion).

The Government of India has reviewed the extant policy and it has been decided to permit, with immediate effect, payments for royalty, lumpsum fee for transfer of technology and payments for use of trademark/brand name on the automatic route i.e. without any approval of the Government of India. All such payments will be subject to Foreign Exchange Management (Current Account Transactions) Rules, 2000 as amended from time to time.

Meaning, Payment of Royalty and Lumpsum fees is fully liberalised now without any ceiling limits and will fall under Automatic Route.

Download SEBI Master Circular on MFs - a one stop legal reference on Mutual Funds issued by SEBI consolidating all about MF as on January 2010

SEBI / IMD / MC No.1 /189241/ 2010 dated 1st January, 2010

To All Mutual Funds, Asset Management Companies (AMCs)
and Association of Mutual Funds in India (AMFI)

Sub: Master Circular for Mutual Funds

For effective regulation of the Mutual Fund Industry, Securities & Exchange Board of India (SEBI) has been issuing various circulars from time to time. In order to enable the industry and other users to have an access to all the applicable circulars at one place, Master Circular for Mutual Funds has been prepared.  This Master Circular is a compilation of all the circulars issued by SEBI on the above subject, which are operational as on date of this circular.

1. This Master Circular includes circulars issued upto December 31, 2009.
2. In case of any inconsistency between the master circular and the applicable circulars, the contents of the relevant circular shall prevail.
3. Master Circular is a compilation of all the existing/applicable circulars issued by Investment Management Department of SEBI issued to Mutual Funds. Efforts have been made to incorporate certain applicable provisions of existing circulars (as on December 31, 2009) issued by other Department/Division of SEBI relevant to Mutual Funds.

The said Master Circular is divided under the following heads:

ABBREVIATIONS............................................................................. 5
CHAPTER 1..................................................................................... 6
OFFER DOCUMENT FOR SCHEMES ................................................. 6
CHAPTER 2................................................................................... 16
CONVERSION AND CONSOLIDATION OF SCHEMES AND LAUNCH OF
ADDITIONAL PLAN........................................................................ 16
CHAPTER 3................................................................................... 21
NEW PRODUCTS ........................................................................... 21
CHAPTER 4………………………………………………………………………….24
RISK MANAGEMENT SYSTEM........................................................ 24
CHAPTER 5................................................................................... 27
DISCLOSURES & REPORTING NORMS ........................................... 27
CHAPTER 6................................................................................... 35
GOVERNANCE NORMS .................................................................. 35
CHAPTER 7................................................................................... 55
SECONDARY MARKET ISSUES ...................................................... 55
CHAPTER 8................................................................................... 59
NET ASSET VALUE........................................................................ 59
CHAPTER 9................................................................................... 68
VALUATION .................................................................................. 68
CHAPTER 10................................................................................. 89
LOADS, FEES AND EXPENSES ....................................................... 89
CHAPTER 11................................................................................. 94
DIVIDEND DISTRIBUTION PROCEDURE ....................................... 94
CHAPTER 12................................................................................. 96
INVESTMENT BY SCHEMES........................................................... 96
CHAPTER 13................................................................................110
ADVERTISEMENTS ......................................................................110

CHAPTER 14................................................................................126
INVESTOR RIGHTS & OBLIGATIONS............................................126
CHAPTER 15................................................................................133
CERTIFICATION AND REGISTRATION OF INTERMEDIARIES .......133
CHAPTER 16................................................................................135
TRANSACTION IN MUTUAL FUNDS UNITS .....................................135

Formats & Annexures are given as attachments.

Download SEBI Master Circular on Mutual Funds (MF)

SEBI ICDR now applies to Convertible preference shares, fast track issues liberalised, employee reservation value limited to Rs. 1 lakh, Anchor Investors in IDR & new book building system introduced based on bids at highest price

No. LAD-NRO/GN/2009-10/23/186926 dated 11th December 2009

Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2009 [SEBI ICDR Amendment]

Reg 2(k) “convertible security” means a security which is convertible into or
exchangeable with equity shares of the issuer at a later date, with or without the option of the holder of the security and includes convertible debt instrument and convertible preference shares.

Reg 2(zd) “Qualified Institutional Buyer” (QIB) has 11 items now:

“(xi) insurance funds set up and managed by army, navy or air force of
the Union of India;”

Fast Track Issues – FTI

• Reg 10(b): The average market capitalisation of public shareholding of the issuer is at least five thousand crore rupees (thus reduced to Rs.5,000 crores from erstwhile Rs.10,000 crores).
• Reg 10(b): the annualised trading turnover of the equity shares of the issuer during 6calendar months immediately preceding the month of the reference date has been at least 2% of the weighted average number of equity shares listed during such 6 months’ period. 
  • Provided that for issuers, whose public shareholding is less than 15% of its issued equity capital, the annualised trading turnover of its equity shares has been at least 2% of the weighted average number of equity shares available as free float during such 6 months’ period.
• Reg 10(e): the issuer has been in compliance with the equity listing agreement for a period of at least 3 years immediately preceding the reference date.
  • Provided that if the issuer has not complied with the provision of the equity listing agreement relating to composition of board of directors, for any quarter during the last 3 years immediately preceding the reference date, but is compliant with such provisions at the time of filing of offer document with the Registrar of Companies (RoC) or designated stock exchange, as the case may be, and adequate disclosures are made in the offer document about such non-compliances during the 3 years immediately preceding the reference date, it shall be deemed as compliance with the condition.

Reg 29: An issuer may offer specified securities at different prices, subject to the following: [Differential Pricing]
(a) retail individual investors or retail individual shareholders or employees of the issuer entitled for reservation (on competitive basis) made under regulation 42 making an application for specified securities of value not more than 1 lakh rupees may be offered specified securities at a price lower than the price at which net offer is made to other categories of applicants: Provided that such difference shall not be more than ten per cent. of the price at which specified securities are offered to other categories of applicants.

Reg 42(4): The reservation on competitive basis shall be subject to following conditions:
(a) the aggregate of reservations for employees shall not exceed 5% of the post issue capital of the issuer [not the erstwhile 10% of issue size].

Also, a new Clause is inserted as:

“(g) value of allotment to any employee in pursuance of reservation made under sub-regulations (1) [reservations when issue made through book building] or (2) [reservations when issue made through OTHER THAN book building], as the case may be, shall not exceed 1 lakh rupees.”

Reg 50: Allotment procedure and basis of allotment.
(1) The allotment of specified securities to applicants other than anchor investors shall be on proportionate basis within the specified investor categories and the number of securities allotted shall be rounded off to the nearest integer, subject to minimum allotment being equal to the minimum application size as determined and disclosed by the issuer.

“Provided that value of specified securities allotted to any person in pursuance of reservation made under clause (a) of sub-regulation (1) or clause (a) of sub-regulation (2) [ie, to employees of issuer] of regulation 42, shall not exceed 1 lakh rupees.”

New Clause: Regulation 55A in Rights Issue: Reservation for employees alongwith rights issue:
55A. Subject to other applicable provision of these regulations the issuer may make reservation for its employees alongwith rights issue subject to the condition that value of allotment to any employee shall not exceed 1 lakh rupees.

 

IDR Amendments

Out of the portion to Qualified Institutional Buyer (QIB), UPTO 30% to Anchor Investors (AI) as per Schedule XI. Allocation to AI shall be made on same day of bidding. AI shall be,

2 or more, if allocation is	UPTO 250 crores
5 or more, if allocation is	ABOVE 250 crores

UPTO 1/3^rd of AI portion is reserved for domestic Mutual Funds (MF).

 

Reg 98: Condition for issue of IDR:

(e) The balance 50% may be allocated among the categories of non-institutional investors and retail individual investors including employees at the discretion of the issuer and the manner of allocation shall be disclosed in the prospectus. Allotment to investors within a category shall be on proportionate basis;

“Provided that atleast 30% of the said 50% IDR issued shall be allocated to retail individual investors and in case of under subscription in retail individual investor category, spill over to the extent of under-subscription shall be permitted to other categories.”

Schedule VIII dealing with DISCLOSURES IN OFFER DOCUMENT, ABRIDGED PROSPECTUS AND ABRIDGED LETTER OF OFFER is amended and in specific cases of this Schedule, the regulations will be implemented w.e.f. 1st January & 1st April 2010.

SCHEDULE XI
[See regulation 28(3) and 102]
BOOK BUILDING PROCESS

The following Paragraph is newly inserted:

“PART D
Alternate method of book building

(may be inspired from French Auction.  In case of Dutch Auction, allotments made at single price (like the existing book building process). In case of French Auction, allotments made at bid price)

In case of further public offers, the issuer may opt for an alternate method of book building, as given in this part subject to the following:
(a) Issuer shall follow the procedure laid down in Part A of this Schedule except clause (13) [determination of price] and clause (15) (a) [proportionate allotment] thereof.
(b) The issuer shall disclose a floor price in the red herring prospectus.
(c) Investors other than retail individual investors shall bid at any price above the floor price.
(d) The bidder who bids at the highest price shall be allotted the number
of securities that he has bided for and then the bidder who has bided at the second highest price and so on, until all the specified securities on offer are exhausted.
(e) Allotment shall be on price priority basis for investors other than retail individual investors.
(f) Allotment to retail individual investors shall be made proportionately as illustrated in this Schedule.
(g) Where, however the number of specified securities bided for at a price is more than available quantity (HEAVY DEMAND), then allotment shall be done on proportionate basis.
(h) Retail individual investors shall be allotted specified securities at the floor price.
(i) The issuer may place a CAP either in terms of No. of specified securities or % of issued capital of the issuer that may be allotted to a single bidder.”

Download SEBI (ICDR) Regulations, 2009 amended as till year 2009.

FII debt allocation through bidding process and first come first serve process - SEBI

This is in continuation of SEBI FII notification regarding allocation of debt investment limits vide [SEBI]FII allocation of government debt investment limit&link to FII section in SEBI website

Allocation through bidding process

In partial amendment to clause 3 (h) of the aforesaid circular IMD/FII & C/ 37/2009, no single entity shall be allocated more than Rs.300 cr. of the government debt investment limit.

In partial amendment to clause 3 (c) and 3(d) of the earlier circular, the minimum amount which can be bid for shall be Rs.50 cr. and the minimum
tick size shall be Rs.50 cr.

The bidding process shall be on December 17, 2009 on the Bombay Stock Exchange (BSE).

Allocation through first come first serve process
An investment limit of Rs.350 cr. in Government debt shall be allocated among the FIIs/sub-accounts on a first come first served basis in terms of SEBI circular dated January 31, 2008, subject to a ceiling of Rs.50 cr. per registered entity.

The debt requests in this regard shall be forwarded to the dedicated email id
fii_debtrequests@sebi.gov.in. The window for first come first served process shall open at 23:59 PM IST, December 17, 2009. Time period for utilization of the allocated debt limit through first come first served basis shall be 11 working days from the date of the allocation.

Source: Cir No. IMD/FII & C/41/2009 dated 15th December, 2009

No NOC while changing MF Distributor, additional open ended plans as addendum or scheme, revised timelines, investor documents to be maintained by AMC – SEBI Circular

I. Sub: AMFI Guidelines for change of mutual fund distributor vide SEBI/IMD/CIR No./ 13/187052 /2009 dated 11th December 2009

It has come to the notice of SEBI that unwarranted hardship (like mandating No Objection Certificate - NOC) is being caused to investors in mutual fund schemes who wish to switch from an existing mutual fund distributor to
either another mutual fund distributor or opt to deal direct.

 

Now, Mutual Funds (MFs) and Asset Management Companies (AMCs) are advised to ensure compliance with the instruction of the investor informing his desire to change his distributor and / or go direct, without compelling that investor to obtain an NoC from the existing distributor.

 

II. Sub: Modifications in the existing SEBI circulars for Mutual Funds vide SEBI / IMD / CIR No 14 / 187175/ 2009 dated 15th December 2009

Over the years, certain circulars/ guidelines have been revised in line with the requirements of investor protection, market development or effective regulation. In continuation of the effort and in consultation with AMFI, modifications in following existing circulars have been carried out (For modification(s), please refer Annexure I):

1. Payment of interest on delay in dispatch of redemption or repurchase proceeds - SEBI Circular SEBI/ MFD/CIR/2/266/2000 dated May 19, 2000.

1. Guidelines for participation by Mutual Funds in Stock Lending Scheme- SEBI circular MFD/CIR/01/047/99 dated February 10, 1999

1. Consolidation of schemes - SEBI Circular No. SEBI/MFD/CIR No.5/12031/03 dated June 23, 2003

1. Launch of Additional Plan under existing Schemes- SEBI Circular No. MFD/CIR No.12/175/01 dated February 15, 2001

1. Guidelines for Investment/Trading in Securities by Employees of Asset Management Company & Mutual Fund Trustee Companies - SEBI Circular No. MFD/CIR No.4/216/2001 dated May 8, 2001

1. Guidelines for Advertisement by Mutual Funds- SEBI Circular No. MFD/CIR/4/51/2000 dated June 5, 2000

1. Advertisements by Mutual Funds - SEBI Circular No. SEBI/MFD/CIR No.6/12357/03 dated June 26, 2003.

The modifications are highlighted hereunder,

1. Asset Management Companies (AMCs) to dispatch dividend warrants within 30 days of the declaration of the dividend.It is clarified that, in the event of failure of dispatch of dividend within the stipulated 30 day period, the AMC(s) shall be liable to pay interest @ 15% per annum to the unit holders.  Further, a STATEMENT OF INTEREST PAID TO THE INVESTORS FOR DELAYS IN DESPATCH OF DIVIDEND shall be sent to SEBI with Compliance Test Reports.
2. Valuation of collateral securities under Participation by MF in Stock lending scheme will be prescribed by SEBI.
3. The AMCs shall maintain records of dispatch of the letters to the unitholders giving them the option to exit at prevailing NAVs without exit loads and the responses received from them and shall be filed with SEBI within 21 days from the closure of Exit Option.
4. Additional plans sought to be launched under existing open ended scheme can be issued as an ADDENDUM, but if it has a substantially different characteristic, it shall be issued as a separate SCHEME.
5. Time periods are shortened.
6. All other provisions of the aforesaid SEBI circulars remain unchanged, where applicable. These modifications shall be applicable from the date of issue of this circular.
7. Details in SEBI / IMD / CIR No 14 / 187175/ 2009 dated 15th December 2009

III. Sub: Transactions through some mutual fund distributors and compliance with the SEBI circular on AML vide SEBI/IMD/CIR No.12 /186868 /2009 dated 11th December 2o09

It has recently come to our attention that all documentation related to the investor including Know your Client, Power of Attorney (PoA) in respect of transactions/requests made through some mutual fund distributors is not available with the AMC/RTA of the AMC and that the same is stated to be maintained by the respective distributors.

In view of the above, we reiterate that the requirements as mentioned in the master circular ISD/AML/CIR-1/2008 dated December 19, 2008 issued by SEBI is applicable to the Mutual Funds/ AMCs and hence maintaining all the documentation pertaining to the unitholders/investor is the responsibility of the AMC.

Thus, all MF and AMCs are advised to confirm whether all the investor related documents are maintained/ available with them. If not, and to the extent of and relating to such investor accounts/folios where investor related documentation is incomplete/inadequate/not available, then the trustees of the mutual funds are advised to ensure the following:
a. No further payment of any commissions, fees and / or payments in any other mode should be made to such distributors till full compliance/ completion of the steps enumerated herein.
b. Take immediate steps to obtain all investor/ unit holders documents in terms of the AML/ CFT, including KYC documents / PoA as applicable
c. Take immediate steps to obtain all supporting documents in respect of the
past transactions.
d. On a one time basis, send statement of holdings and all transactions since
inception of that folio in duplicate to the investor and seek confirmation from
the unit holders on the duplicate copy.
e. Set up a separate customer services mechanism to handle/ address queries and grievance of the above mentioned unitholders.

Pending completion of documentation, exercise great care and be satisfied of
investor bonafides before authorizing any transaction, including redemption, on such accounts / folios.

The trustees shall forthwith confirm to SEBI that the steps have been taken to address the above and also send a status to SEBI as and when process is
completed to satisfaction.

SEBI Clarification on preservation & maintenance of records of intermediaries taken during Investigation by enforcement agency

MRD/DoP/DEP/Cir- 20 /2009 & MRD/DoP/SE/Cir- 21 /2009 dated 9th December 2009

Re: SEBI (Depositories and Participants) Regulations, 1996 (which mandates preservation of records for 5 years), Securities Contracts (Regulation) Rules, 1957 (stock exchange to preserve records for 2 – 5 years) and SEBI (Stock Brokers & Sub-brokers) Regulations, 1992 (which mandates preservation of records for 5 years).

It is clarified that if a copy of such record is taken by enforcement agency like CBI, Police, Crime Branch etc. during the course of investigation, either from physical or electronic record then the respective original is to be maintained till the trial or investigation proceedings have concluded.