Sebi notifies rules on dividend, redemption proceeds to mutual fund unitholders

Capital markets regulator Sebi has notified new rules for asset management companies (AMCs) pertaining to transfer of dividend and redemption proceeds to mutual fund unitholders.

Under this, every mutual fund and asset management company would be required to transfer to the unitholders the dividend payments and the redemption or repurchase proceeds within a period specified by Sebi, the regulator said in a notification made public on Thursday.

In case of failure to transfer the proceeds within the specified period, the AMC would be liable to pay interest to the unitholders for the period of such delay.


"Notwithstanding payment of such interest to the unit-holders...the asset management company may be liable for action for failure to transfer the redemption or repurchase proceeds or dividend payments within the stipulated time," Sebi said.

It further said that physical despatch of redemption or repurchase proceeds or dividend payments would be carried out only in exceptional circumstances and AMCs would be required to maintain records along with reasons for all such physical despatches.

To give this effect, the Securities and Exchange Board of India (Sebi) has amended mutual funds rules and the new norms would come into force from January 15.

Separately, the regulator has amended norms governing clearing corporations for orderly winding down of such corporations.

Every clearing corporation would be required to ensure that the new framework provides for the timely and orderly settlement or transfer of position and the transfer of the collateral, deposit, margin or any other asset of the members to another recognised clearing corporation that would take over the operations of the clearing corporation.

In addition, Sebi has amended Alternative Investment Funds (AIF) rules in order to prescribe the timeline for declaring first close of a scheme of an AIF.

"If the Alternative Investment Fund fails to declare the first close of the scheme in the specified manner, it shall be required to file a fresh application for launch of the scheme by paying the requisite scheme fee," the regulator said.