Mutual Funds
SEBI tightens disclosure norms for mutual funds

MFs would be required to disclose certain additional details about their assets under management (AUM) as well as explain rationale behind exercising their voting rights in companies from 1st April

Market regulator Securities and Exchange Board of India (SEBI) has asked mutual fund (MF) houses to make monthly disclosures about assets managed by them and explain the rationale behind exercising their voting rights in companies. This is the part of a long-term policy issued by SEBI for mutual fund and would come into force from 1 April 2014.

 

The long-term policy for the over Rs9 lakh-crore MFs industry aims to make it an attractive investment proposition for retail investors and also provides for bolstering distribution channels. It has suggested selling of mutual funds through public sector banks and online to increase their penetration.

 

In a circular, SEBI said MFs would be required to disclose certain additional details about their assets under management (AUM) on a “monthly basis”. Besides, the data has to be put on a consolidated basis on the website of Association of Mutual Funds of India (AMFI) within seven working days of the month.

 

Also, MFs should disclose the rationale while exercising their voting rights in investee companies. “Asset management companies (AMCs) shall be required to record and disclose specific rationale supporting their voting decision (for, against or abstain) with respect to each vote proposal,” according to the SEBI circular.

 

Some of the important guidelines from SEBI are listed below:

 

Disclosure of AUM

(a) Disclosure of assets under management (AUM) on a monthly basis.

 

(b) The disclosures will include contribution of AUM from different category of schemes; top tier and other cities; sponsors and associates; entities other than sponsor and associates; investors type (retail, corporate, etc) in different scheme type (equity, debt, ETF, etc.); AUM garnered through sponsor group/ non-sponsor group distributors; and State-wise/Union territory-wise contribution to AUM.

 

(c) This information will be disclosed on the respective AMC’s website and on AMFI website.

 

 Disclosure of Voting Exercise

(a) AMCs will record and disclose specific rationale supporting their voting decision (for, against or abstain) with respect to each vote proposal.

 

(b) AMCs will publish summary of votes cast across all its investee companies and along-with break-up of for, against or abstained votes.

 

(c) AMCs will disclose voting exercises on their website on a quarterly basis, within 10 working days from the end of the quarter and also in their annual report.

 

(d) AMCs will obtain Auditor's certification on voting reports being disclosed by them which will be submitted to trustees and also disclosed in the annual report & website.

 

(e) Board of AMCs and Trustees will review and ensure that AMCs have voted on important proposals and the rationale recorded for vote decision is prudent and adequate.

 

Other Disclosures

(a) Mutual Funds will make available printed literature on mutual funds in regional languages.

 

(b) Mutual Funds will introduce Investor awareness campaign in regional languages both in print and electronic media.

 

(c) AMCs will develop a system for active support to PSU banks to distribute Mutual Fund products through them.

 

(d) Mutual funds will also provide an online investment facility on their websites

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COMMENTS

CHILUKURI K R L RAO

3 years ago

An AUM of around Rs.9 Lakh crore on the face of it looks impressive but how much of it is from retail investors is the real question. Investor category-wise disclosure (whether retail or corporate) and geographical AUM disclosure gives a true picture of penetration of mutual funds in the country.

Disclosure of basis of payment of commissions (money life pointed out repeatedly about the huge upfront commissions that are being paid to big distributors like banks and National distributors) would have been another important step in safeguarding the interest of small distributors / IFAs(consequently would have safeguarded the interest of retail or small investors whom the IFAs mainly serve). Transparency in payment of commissions would have certainly helped increase the penetration of Mutual Funds.

REPLY

Nilesh KAMERKAR

In Reply to CHILUKURI K R L RAO 3 years ago

Who will safeguard interest of small distributors/IFAs ?

& more importantly WHY?

Like everybody else IFAs must fend for themselves rather than waiting for a non-existent saviour.

Rather than risking their survival on trail commission, It is time for IFAs to become serious investors first & achieve financial freedom.



Tata Power’s Rs2,000 crore rights issue to open on 31st March

Tata Power is raising about Rs2,000 crore through a rights issue for paying its debts and capital expenditure. The issue is priced at Rs60 per share, including a premium of Rs59 a piece

Tata Power Co Ltd said it would raise about Rs2,000 crore through a rights issue for paying its debts and capital expenditure. The issue would open for subscription from 31st March to 15th April.
 

Existing Investors holding 50 shares will be eligible to buy seven shares through rights issue (Rights entitlement ratio of 7:50), the Tata group company said.
 

Tata Power will offer 33.22 crore shares with a face value of Rs1 each at Rs60 a share (including a premium of Rs59) to its existing investors.
 

“Tata Power has earmarked Rs300 crore for generation, transmission and distribution of electricity in the Mumbai license area, while Rs498.35 crore would be used for general corporate purposes,” the offer document from Tata Power said.
 

Tata Power will extend Rs639.51 crore from the funds raised to Coastal Gujarat Power Ltd, the operator of the 4,000 MW Mundra ultra mega power project in Gujarat, for part repayment of borrowings, according to its  offer document. About Rs 533 crore from the net proceeds will be used to partly repay certain borrowings of Tata Power.
 

As on December 2013, Tata Power’s total long-term outstanding debt from banks and financial institutions stood at Rs9,091.77 crore. Tata Powers in its December quarter reported 16% higher standalone net profit of Rs251.13 crore from Rs216.38 crore, despite 21% fall in its revenues at Rs2,007.92 crore from Rs2,549.11 crore in as same period a year ago.
 

Tata Power closed Tuesday 1.2% up at Rs81.35 on BSE. While the 30-share Sensex ended flat at 22,055.

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Indian Mujahideen chief Tehseen Akhtar arrested

With the arrest of Tehseen, almost the entire top leadership of Indian Mujahideen, has been nabbed by the police

In a major breakthrough, a Special Cell of Delhi Police arrested Tehseen Akhtar alias Monu, the current chief of terror outfit Indian Mujahideen (IM). Akhtar is one of the most wanted terrorist blamed for a number of terror attacks in India.

 

Special Commissioner of the Special Cell SN Shrivastava confirmed his arrest but refused to divulge more details.

 

Akhtar was heading the IM after the arrest of Yasin Bhatkal, co-founder of the terror outfit.

 

With the arrest of Tehseen, almost the entire top leadership of Indian Mujahideen has been nabbed by the police.

 

Earlier, Delhi Police nabbed another top IM operative Zia Ur Rehman alias Waqas from Ajmer in Rajasthan along with three of his associates.

 

Indian Mujahideen co-founder Ahmad Siddhibappa Zarar alias Yasin Bhatkal, Tehseen Akhtar alias Monu, Asadullah Akhtar alias Haddi and Zia Ur Rehman alias Waqas were the brains behind almost every IM attack on Indian soil.

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