Securities and Exchange Board of India (Mutual Funds) (Third Amendment) Regulations, 2024

8126 GI/2024 (1)
REGD. No. D. L.-33004/99 xxxGIDHxxx xxxGIDExxx EXTRAORDINARY
PART III—Section 4
PUBLISHED BY AUTHORITY
Securities and Exchange Board of India
New Series
Mumbai, December 16, 2024
Securities and Exchange Board of India
(Mutual Funds) (Third Amendment) Regulations, 2024 No. SEBI/HO/EMD-II/POI-2/2024/221.—In exercise of the powers conferred by sub-section (2) of clause (g) of section 11 read with section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following regulations to further amend the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, namely:

These regulations may be called the Securities and Exchange Board of India (Mutual Funds) (Third Amendment) Regulations, 2024.
These regulations shall come into force on the date of their publication in the Official Gazette:
No. 992] NEW DELHI, MONDAY, DECEMBER 16, 2024/ AGRAHAYANA 25, 1946 CG-MH-E-16122024-259451

2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC.4] Provided that the regulations under sub-regulations I, II and VI of regulation 3 of these amendments shall come into force with immediate effect from the date of their publication in the Official Gazette:
Provided further that the regulations under sub-regulations IV and V of regulation 3 of these amendments shall come into force on April 1, 2025.

In the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996,–
I. In Chapter-II, in regulation 11, the words and figures “in respect of” shall be substituted by the words and figures “or as provided in regulation 81”.

II. In Chapter-IV, in regulation 23, the words and figures “where the asset management company does not meet the minimum net worth requirements specified in regulation 21 under regulation 19” shall be substituted by the words, figures and letters “where any direction issued under regulation 19 (net worth) has not met the eligibility criteria specified in regulation 21 and regulation 86,”.

III. In regulation 29K,–
(i) In sub-regulation (1), the words and letters “will provide the option to nominate, in the fourth schedule in the nominee’s name, the person including the unit holder’s nominee in the event of his death” shall be substituted by the words and letters “will provide the option to nominate any such person, in the same manner as may be specified from time to time, to whom the units held by the unit holder at the time of his death shall be transferred”. (ii) The existing sub-regulation (2) shall now become sub-regulation (3). (iii) After sub-regulation (1), the following sub-regulation shall be added, namely:
“(2) The unit holder shall have the option to nominate any such person, in the same manner as may be specified, who shall be authorized to receive (transfer) on behalf of the unit holder in the event of the unit holder’s incapacity.” (iv) After sub-regulation (3), the following sub-regulation shall be added, namely:
“(4) If the nomination is made by the unit holder, the Asset Management Company (AMC) or Registrar to an Issue and Share Transfer Agent (RTA and Share Transfer Agent) shall not be liable for the same.”

IV. In Chapter-VI, in regulation 43, after sub-regulation (7), the following sub-regulation shall be added, namely:
“(8) The investment made under the ‘Investment Strategy’ of any ‘Specialized Investment Fund’ shall be made in accordance with the provisions of regulation 49Y.”

V. After Chapter VI-B, the following Chapter and regulations shall be added, namely:

“Chapter VI-C
‘Specialized Investment Fund’
Definitions:
49P. For the purposes of this Chapter, the definitions of the following terms are given below, unless the context otherwise requires:
(a) “Alternative Investment Fund” shall have the same meaning as assigned to it in clause (cc) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India [Alternative Investment Funds] Regulations, 2012 [SEBI (Alternative Investment Funds) Regulations, 2012]; (b) ‘Specialized Investment Fund’ means a mutual fund (mutual fund) as defined in clause (h) of sub-regulation (1) of regulation 2 of these regulations, and to which such additional rules as are specified in this Chapter shall apply:
Provided that a registered mutual fund under regulation 9 shall not be required to create a separate trust to launch any ‘Investment Strategy’ under the ‘Specialized Investment Fund’. (c) ‘Investment Strategy’ means any scheme of a mutual fund launched under the ‘Specialized Investment Fund’.

Applicability:
49Q. (1) The provisions of this Chapter shall apply to ‘Specialized Investment Funds’.
(2) Until the amendments (c) and (d) are made, all other provisions of these regulations and the circulars (circulars) issued thereunder shall apply to ‘Specialized Investment Funds’ and the ‘Investment Strategies’ launched under them, on Trustees (Trusts) and Asset Management Companies, except where separate provisions (c) and (p) have been made under this Chapter in respect thereof, in which case those provisions shall apply.

Eligibility Requirements:
49R. (1) A mutual fund registered under regulation 9 may be granted permission by the Board to become a ‘Specialized Investment Fund’ in the manner specified by the Board, and for which it shall have to meet the eligibility criteria specified by the Board.

Rules regarding ‘Specialized Investment Funds’:
49S. (1) A ‘Specialized Investment Fund’ shall not make an investment (aggregate of the amount invested in each ‘Investment Strategy’) of less than Rs. 50 lakh in any Alternative Fund, and it shall be done in the same manner as specified by the Board:
Provided that this provision regarding the minimum amount of investment shall not apply to “Alternative Investment Funds”.
(2) The Fund Manager (Asset Manager) of the ‘Specialized Investment Fund’ shall hold the certificate of the National Securities Depository Limited (NSDL) as may be specified by the Board from time to time. (3) All provisions applicable to the schemes of mutual funds under these regulations shall also apply to the ‘Investment Strategies’ launched under the ‘Specialized Investment Fund’, unless otherwise specified in (c) and (u).

Process for launching ‘Investment Strategies’:
49T. (1) The process for launching ‘Investment Strategies’ under the ‘Specialized Investment Fund’ shall be the same as that prescribed for launching schemes of mutual funds under regulation 28:
Provided that a ‘Specialized Investment Fund’ may launch such ‘Investment Strategy’ in the same manner as may be specified by the Board from time to time. (2) The ‘Investment Strategy’ under the ‘Specialized Investment Fund’ shall be launched as an ‘Open-Ended Investment Strategy’ (Unrestricted Investment Strategy) or ‘Closed-Ended Investment Strategy’ (Restricted Investment Strategy) or ‘Interval Investment Strategy’, and the Offer Document shall clearly state (disclose) when money can be invested (subscribed) and when it can be withdrawn (redeemed). (3) In the case of ‘Investment Strategies’ launched under the ‘Specialized Investment Fund’, the same fees and the same amount of expenses shall be charged as specified in regulation 52 of these regulations.

Where investment can be made:
49U. (1) A ‘Specialized Investment Fund’ may make investment of the amount invested under any of its ‘Investment Strategies’ in such instruments (documents) in which the mutual fund schemes are permitted to invest under sub-regulation (1) of regulation 43:
Provided that the investment by the ‘Specialized Investment Fund’ shall be made in the same manner as specified by the Board.
(2) While making any investment under sub-regulation (1) of regulation 49U, the restrictions specified in regulation 49K shall be kept in mind.

Restrictions on Investment:
49KK. (1) No ‘Investment Strategy’ under the ‘Specialized Investment Fund’ shall invest more than 20% of its AUM in such Debt Instruments (Debt Documents) [including Money Market Instruments (Money Market Papers) and other instruments other than Money Market Instruments] issued by a single issuer (entity) and rated below investment grade by any Credit Rating Agency (which is authorized under the Act to give such ratings). This limit of investment may be increased to 25% of the AUM of the ‘Investment Strategy’, but for which prior approval shall be obtained from the Board of Trustees (Board of Trusts) and the Investment Committee of the Asset Management Company:
Provided that this limit shall not apply to investments made in Government Securities, Treasury Bills (Treasury Bills) and Government Securities or Treasury Bills (Treasury Bills) in “Repo” transactions:
Provided further that investments within this limit may be made in such Secured Debt (Secured Loans) for which (c) is kept and which have been rated below investment grade (investment grade) by any Credit Rating Agency registered with SEBI:
Provided further that this limit shall not apply to investments made in Debt Exchange Traded Funds or such other funds (as specified by the Board from time to time).

[PART III—Section 4] Gazette of India : Extraordinary 5 (2) No ‘Specialized Investment Fund’ shall invest (aggregate of investments made under each of its ‘Investment Strategies’) more than fifteen percent of the paid-up capital (equity capital) [for equity shares] of any one company in its paid-up capital:
Provided that the provision of clause (a) of sub-regulation (1) of regulation 7K shall apply to investments made in the Asset Management Company or Trust (Trust) Company of any mutual fund:
Provided further that the limit specified in sub-regulation (2) above shall also include the same limit of 10 percent fixed for the schemes of mutual funds as specified in clause-2 of the Seventh Schedule. Clarification: If any mutual fund invests more than ten percent of the paid-up capital (equity capital) [for equity shares] of any company in its paid-up capital (aggregate of investments made under each of its ‘Investment Strategies’), then in such a case the ‘Specialized Investment Fund’ shall not invest more than five percent of the paid-up capital (equity capital) [for equity shares] of that company in its all Investment Strategies. (3) No ‘Investment Strategy’ under the ‘Specialized Investment Fund’ shall invest more than 10 percent of its AUM in the equity shares and equity linked instruments (equity related documents) of any one company. (4) ‘Specialized Investment Funds’ may invest in REITs and InvITs, provided that:
(a) No ‘Specialized Investment Fund’ shall invest (aggregate of investments made under each of its ‘Investment Strategies’) in more than 20 percent of the units issued by any single issuer (entity) of REITs and InvITs:
Provided that the limit specified in clause (a) of sub-regulation (4) above shall also include the same limit of 10 percent fixed for the schemes of mutual funds as specified in clause-13(a) of the Seventh Schedule. (b) The ‘Investment Strategy’ to be launched under the ‘Specialized Investment Fund’– (i) shall not invest more than 20 percent of its AUM in the units of REITs and InvITs; and (ii) shall not invest more than 10 percent of its AUM in the units of REITs and InvITs issued by any single issuer:
Provided that the limits specified in sub-clause (i) and (ii) above shall not apply to investments made in the case of any Index Fund or Sector Specialized Scheme or Industry Specialized Scheme related to REITs and InvITs. (5) The other restrictions regarding investment in the case of schemes of mutual funds (as specified in the Seventh Schedule), all such restrictions shall apply to the ‘Investment Strategies’ to be launched under the ‘Specialized Investment Fund’.

Functions of Asset Management Company:
49KKH. (1) The Asset Management Company shall ensure that it has a clear address of the ‘Specialized Investment Fund’ it creates and that the fund is completely separate from the mutual fund, so that the amount invested for the ‘Specialized Investment Fund’ and the amount invested by the mutual fund are clearly distinguished from each other. (2) The Asset Management Company shall comply with the provisions regarding branding, issuing notices, standard disclaimers, use of the brand name of the Asset Management Company or mutual fund, and maintaining a separate website, as specified by the Board from time to time.

Functions of Trustees (Trusts):
49KKI. (1) The Trustees (Trusts) shall ensure that there is an internal control system in the Asset Management Company for making investments and managing the investments made, and that there is an internal risk management system. (2) The Trustees (Trusts) shall ensure that the Asset Management Company complies with such other provisions etc. as may be specified by the Board from time to time regarding risk management, protection of investors, disclosures etc. and reporting. (3) The Trustees (Trusts) shall ensure that the activities of the ‘Specialized Investment Fund’ are in accordance with the provisions of these regulations.

Disclosures to be made in the Offer Document (Offer Document):
49KKJ. (1) The Offer Documents (Offer Documents) of the ‘Specialized Investment Fund’ shall contain all such necessary disclosures (all such disclaimers shall be made) that are necessary for investors to make an informed decision regarding investment (specifically stating that investing in it involves significant risk), and such disclosures shall be made in the same manner as specified by the Board. (2) The disclosures (disclaimers) of the prospectuses regarding the ‘Specialized Investment Fund’ shall be made in the same manner as specified by the Board.”

VI. After Chapter-X, the following Chapter shall be added, namely:

“Chapter-XI
Mutual Fund Light
Definitions
79. (1) For the purposes of this Chapter, the definitions of the following terms are given below, unless the context otherwise requires –
(a) “Trustee (Trust)” means such Benchmark Trustee (Trust) registered with the Board under the Securities and Exchange Board of India (Benchmark Trustee) Regulations, 1993:
Provided that if any current Sponsor transfers its eligible schemes to its current mutual fund as ‘Mutual Fund Light’ under regulation 82, then in such a case the ‘Mutual Fund Light Asset Management Company’ may appoint the current Trustee (Trust) of the mutual fund as the Trustee (Trust) of the ‘Mutual Fund Light’.

[PART III—Section 4] Gazette of India : Extraordinary 7 (b) “Mutual Fund Light” or “MFL” means that mutual fund which is registered under this Chapter and which holds such Index Funds, Exchange Traded Funds, Funds of Funds (Funds of Funds) or other schemes of mutual funds as may be specified by the Board from time to time. (c) “Mutual Fund Light Asset Management Company” or “MFL Asset Management Company” or “MFL AMC” means that Asset Management Company (Asset Management Company) of the ‘Mutual Fund Light’ which has been granted permission under this Chapter. (d) “Scheme of Mutual Fund Light” or “Scheme of MFL” means any such scheme launched by Mutual Fund Light or any other eligible scheme specified by the Board from time to time.

Applicability
80. (1) The provisions of this Chapter shall apply to ‘Mutual Fund Light’ and the schemes of ‘Mutual Fund Light’.
(2) Until the amendments (c) and (d) of these regulations are made, those shall apply to ‘Mutual Fund Light’, the schemes of ‘Mutual Fund Light’ and such mutual funds and such schemes and the Trustees (Trusts) and Asset Management Companies associated with them, except that the following provisions and the circulars (circulars) issued under these regulations are not included in these other provisions:
i. Regulation 7;
ii. Regulation 14;
iii. Regulation 15;
iv. Regulation 16;
v. Regulation 18;
vi. Clause (d) and (f) of sub-regulation (1) of Regulation 21;
vii. Clause (c) of Regulation 22;
viii. Regulation 24;
ix. Regulation 25;
x. Regulation 25K;
xi. Sub-regulation (1) of Regulation 28;
xii. Regulation 38K;
xiii. Regulation 43K;
xiv. Chapter VI-A;
xv. Chapter VI-B;
xvi. Regulation 59;

8 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC.4]
xvii. Regulation 59K;
xviii. Third Schedule;
xix. Fourth Schedule; and
xx. Twelfth Schedule.

Eligibility Criteria
81. To issue a registration certificate as ‘Mutual Fund Light’, the applicant shall fulfill the following requirements, namely:-
(a) The Sponsor’s past record should be good and it should generally be believed that he has maintained full probity and honesty in all business transactions (operations). Clarification: For the purposes of this clause, “past record should be good” means that the Sponsor:- (i) shall ensure that its net worth (net worth) has been positive in all the previous five financial years; and (ii) shall ensure that its net worth (net worth) is higher than the amount invested by it in the MFL Asset Management Company, and also ensure that if there is any change in the control of the current Asset Management Company due to share allotment, then either the Sponsor’s net worth (net worth) remains higher than the amount invested, or it is equal to the face value (par value) or market value (market value) [whichever is higher] of the shares for which the offer was made; and (iii) has made a profit (after deducting depreciation, interest and tax amount) in at least three out of the previous five financial years (including the fifth year); and (iv) has made an average annual profit (after deducting depreciation, interest and tax amount) of at least five crore rupees in the previous five financial years:
Provided that if the Sponsor fails to fulfill the requirements specified in the clarification of clause (a), then the Sponsor:- (i) shall invest such an amount in the MFL Asset Management Company that the net worth (net worth) of the aforesaid Asset Management Company does not remain less than seventy-five crore rupees; and (ii) shall ensure that its shareholding (shareholding) of at least seventy-five crore rupees value invested in the MFL Asset Management Company remains locked-in for a period of three years; and (iii) shall make further appointments in the MFL Asset Management Company such that the Chief Executive Officer (CEO), Chief Operating Officer (COO), Chief Compliance Officer (CCO) and Chief Investment Officer (CIO), together, have a combined experience of at least twenty years; and

[PART III—Section 4] Gazette of India : Extraordinary 9 (iv) shall ensure that if the current MFL Asset Management Company is merged or amalgamated, the Sponsor’s net worth (net worth) remains as specified and is increased to such an extent that the minimum requirement specified in the MFL Asset Management Company is also fulfilled and the Sponsor’s net worth (net worth) or the amount invested by it is equal to the face value (par value) or market value (market value) [whichever is higher] of the shares for which the offer was made; (v) shall ensure that if there is any institutional purchase in any current MFL Asset Management Company, then at least seventy-five crore rupees worth of shares remain locked-in for three years; and (vi) shall ensure that the rules specified by the Board from time to time in this regard are complied with:
Provided further that a Private Equity Fund or Pooled Investment Vehicle (such an entity that collects money from different investors and then invests it) or Pooled Investment Fund (such a fund that collects money from different investors and then invests it) may also be the Sponsor (Sponsor) of the Mutual Fund Light, provided that the additional rules specified by the Board from time to time in this regard are complied with. (b) The applicant is a fit and proper person in accordance with the criteria specified in Schedule-II of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008 [SEBI (Intermediaries) Regulations, 2008]. (c) In the case of the current mutual fund, such a fund should be in the form of a Trust (Trust) and the Trust Deed (Trust Deed) should have been approved by the Board; (d) The net worth (net worth) of the ‘MFL Asset Management Company’ should have at least 40% institutional Sponsor (Sponsor) holding:
Provided that if any person has institutional holding of 40% or more in the ‘MFL Asset Management Company’, he shall be considered as a Sponsor (Sponsor) and shall have to fulfill the eligibility criteria given in these regulations; (e) The Sponsor (Sponsor) or any Investor of ‘MFL’ or the Principal Officer (Principal Officer) appointed by him should not be convicted of any fraud or any crime (which includes doing any such act even if it is legally correct) or any economic crime; (f) The Trustees (Trusts) of ‘MFL’ should be Benchmark Trustees (Trusts) in accordance with the provisions of the regulations; (g) The ‘MFL Asset Management Company’ should have the experience to operate ‘MFL’ and operate the schemes of such funds in accordance with the provisions of these regulations;

10 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC.4] (h) The ‘Mutual Fund Light’ should have the experience to keep (protect/custody) the securities (securities) and other assets (assets) [as specified by the Board] held by it and also to provide such other necessary services related to custody for the operation of ‘Mutual Fund Light’.

Shareholding Criteria
82 (1) Notwithstanding anything contained in regulation 7K of these regulations, the Sponsor (Sponsor) shall be permitted to register as a mutual fund under Chapter-II of these regulations, and shall also be permitted to register separately as ‘Mutual Fund Light’ under this Chapter, provided that he complies with the rules specified by the Board from time to time. (2) Notwithstanding anything contained in regulation 7K of these regulations, the current Sponsor (Sponsor) may transfer its eligible schemes (which are eligible to become ‘Mutual Fund Light Schemes’) from its current mutual fund to that ‘Mutual Fund Light’ which is an entity of the same Sponsor (Sponsor)’s group, provided that he complies with the rules specified by the Board from time to time:
Provided that if any current Sponsor transfers its eligible schemes from its current mutual fund to ‘Mutual Fund Light’, then after such transfer, the current mutual fund shall not launch any such eligible schemes which are eligible to become ‘Mutual Fund Light Schemes’. (3) Notwithstanding anything contained in regulation 7K of these regulations, if any current shareholder has 10% or more shares or voting rights in the current Asset Management Company of the mutual fund, then in such a case he may be permitted to hold 10% or more shares or voting rights in that ‘Mutual Fund Light Asset Management Company’ if it is an entity of the same Sponsor (Sponsor)’s group. (4) If any current mutual fund wants to launch only ‘Mutual Fund Light’ schemes, it may surrender its current registration certificate and become ‘Mutual Fund Light’ under this Chapter, but for which it has to comply with those rules and the same procedure shall be adopted as specified by the Board.

Registration of Trust Deed (Trust Deed) under Registration Act
83. The ‘Mutual Fund Light’ shall be created as a Trust (Trust), and for which the Trust Deed (Trust Deed) shall be registered in accordance with the provisions of the Registration Act, 1908 (16 of 1908) (in the form specified by the Board) and this Trust Deed shall be created by the ‘Mutual Fund Light Asset Management Company’ in favor of such Trustees (Trusts) as mentioned in that Trust Deed:
Provided that if the Sponsor (Sponsor) is separate, then who will sign that Trust Deed (Trust Deed) shall be specified by the Board.

Experience of Trustees (Trusts)
84. (1) Notwithstanding anything contained in regulation 7K of these regulations, a single Benchmark Trustee (Trust) may be appointed as the Trustee (Trust) of more than one ‘Mutual Fund Light’.
(2) The Trustee (Trust) of the ‘Mutual Fund Light’ shall be an independent entity, and it shall not be an associate of the Sponsor (Sponsor) of the relevant ‘Mutual Fund Light Asset Management Company’ or the manager (Manager) of the ‘Mutual Fund Light Asset Management Company’.

Securities and Exchange Board of India (Mutual Funds) (Third Amendment) Regulations, 2024

(3) No Trustee shall be eligible to act as a Trustee (Trust) under this Chapter until it complies with the guidelines issued by the Securities and Exchange Board of India (SEBI) Trustee Regulations, 1993 regarding 'fair and equitable treatment'.

Rights and Duties of Trustees (Trusts)

(1) The Trustee (Trust) and the Mutual Fund Asset Management Company shall enter into an Investment Management Agreement (Investment Management Agreement).

(2) The Investment Management Agreement shall contain such provisions as may be specified by the Board, and also such other provisions as may be necessary for the implementation of the agreement.

(3) The Trustees shall be responsible for the funds (Funds) and liabilities of the 'Mutual Fund Schemes' under this Chapter and the Trust Deed (Trust Deed), and shall be custodians thereof, and shall hold them in trust for the beneficiaries.

(4) The Trustees (Trusts) shall have adequate infrastructure, adequate staff, adequate systems, etc., as may be required by the Trustees to properly implement their duties under the regulations.

(5) The Trustees (Trusts) shall keep a watch on the functioning of the 'Mutual Fund Asset Management Company' for the benefit of the beneficiaries, and shall periodically obtain reports regarding its functioning and compliance with applicable regulations, as may be specified by the Board.

(6) The Trustees (Trusts) shall have the right to make reasonable demands from the 'Mutual Fund Asset Management Companies' under the Trust Deed (Trust Deed).

(7) If the Trustees (Trusts) are of the opinion that the business of 'Mutual Fund' is not being carried on in accordance with the regulations or is not reaching the beneficiaries, then in such cases, they shall take immediate necessary action and report the same to the Board immediately, and also inform the Board about the action taken by them thereon.

(8) The Trustees (Trusts) shall periodically verify complaints made by beneficiaries and review the actions taken by the 'Mutual Fund Asset Management Company' regarding the resolution of such complaints.

(9) If there is any change in the control of the 'Mutual Fund Asset Management Company', the Trustees (Trusts) shall give their consent regarding the same.

(10) The Trustees (Trusts) shall ensure that the 'Mutual Fund Asset Management Company' has not provided any undue benefit to any associate (associate/affiliate) or dealt with any associate of the 'Mutual Fund Asset Management Company' in such a manner that it causes prejudice to the interests of the beneficiaries.

(11) Each Trustee (Trust) shall make available to the 'Mutual Fund' the details of its dealings (transactions) in securities within such time and in such manner as may be specified by the Board from time to time.

(12) The Trustees (Trusts) shall take action to ensure that the transactions (transactions) made by the 'Mutual Fund' are in accordance with the provisions of the Trust Deed (Trust Deed).

(13) The Trustees shall obtain the consent of the beneficiaries:

(a) whenever the Board directs them to do so for the benefit of the beneficiaries; or (b) whenever one-third of the beneficiaries of any 'Mutual Fund Scheme' so direct; or (c) whenever the majority of the Trustees (Trusts) decide to close (wind-up) any scheme under the regulations or redeem the units of a 'Closed Ended Scheme' before the maturity of the units.

(14) The Trustees (Trusts) shall obtain from the 'Mutual Fund Asset Management Company' the details of the transactions (transactions) in securities made by the persons (persons) sitting on important positions on their behalf or on behalf of the 'Mutual Fund Asset Management Company', and if necessary, report the same to the Board.

(15) The Trustees (Trusts) shall review all transactions (transactions) entered into between the 'Mutual Fund', the 'Mutual Fund Asset Management Company', and its associates (associates/affiliates) on a quarterly basis.

(16) The Trustees (Trusts) shall ensure that the 'Mutual Fund Asset Management Company' invests its net worth in such a manner that it does not cause any prejudice to the interests of the beneficiaries.

(17) The Trustees (Trusts) shall comply with the Code of Conduct contained in Part A of the Fifth Schedule of the regulations.

(18) The Trustees (Trusts) shall keep their observations on the reports received from the 'Mutual Fund Asset Management Company' regarding the transactions made by the Mutual Fund (Sponsor) in the securities of the Sponsor's group companies.

(19) The Trustees (Trusts) shall ensure that there is no prejudice to the assets of the Trust (Trust), that they are held by the right persons, and that they are managed properly, and also that the right number of people are engaged in this work.

(20) The Trustees (Trusts) shall exercise due diligence in such other matters as may be specified by the Board from time to time.

(21) Notwithstanding anything contained in sub-regulations (1) to (20), the Trustees shall not be held liable for such acts, etc., if they have exercised due diligence while performing such acts, etc., and have acted in accordance with the provisions of the Trust Deed (Trust Deed).

Net Worth of 'Mutual Fund Asset Management Company' to be Maintained

(1) The net worth of the 'Mutual Fund Asset Management Company' shall not be less than twenty-five crore rupees, and its investment shall be made in assets specified by the Board:

Provided that if the 'Mutual Fund Asset Management Company' has been incurring losses for five consecutive years, then in such cases, it may reduce its net worth to twenty-five crore rupees.

(2) Where the Sponsor meets the requirements specified in clauses (i) to (iv) of Part (i) of the clarification of clause (a) of regulation 81 of the regulations at the time of appointment, the net worth of the 'Mutual Fund Asset Management Company' shall not be less than fifty crore rupees, and its investment shall be made in assets specified by the Board:

Provided that if the 'Mutual Fund Asset Management Company' has been incurring losses for five consecutive years, then in such cases, it may reduce its net worth to twenty-five crore rupees.

Clarification: While calculating the net worth of the 'Mutual Fund Asset Management Company', the following loans and advances shall not be deducted: those given by the 'Mutual Fund Asset Management Company' to the Sponsor, the Sponsor's associates (associates/affiliates), or the Sponsor's group companies (group companies), and the Sponsor's associates or its group companies.

(3) The net worth of the 'Mutual Fund Asset Management Company' shall always remain in accordance with sub-regulation (1) or (2) of this regulation, and the responsibility to ensure this shall be of the Sponsor.

(4) Notwithstanding anything contained in sub-regulations (1) to (3), if the AUM (Assets Under Management) of the 'Mutual Fund Asset Management Company' exceeds the prescribed limit, then the 'Mutual Fund Asset Management Company' shall comply with the requirements regarding net worth contained in Chapter IV of the regulations.

'Mutual Fund Asset Management Company' and its Duties

(1) The investments of the 'Mutual Fund Asset Management Company' shall be made by the Sponsor (Sponsor), and the Sponsor shall make such investments only after thorough verification.

(2) The 'Mutual Fund Asset Management Company' shall take all necessary actions and conduct thorough verification to ensure that there is no violation of the regulations and the provisions of the Trust Deed (Trust Deed) regarding the investment of the funds of the Mutual Fund Schemes.

(3) The 'Mutual Fund Asset Management Company' shall obtain prior approval from the recognized Stock Exchange(s) wherever necessary, under the provisions of the regulations, before listing the units for listing.

(4) The 'Mutual Fund Asset Management Company' shall be responsible for any act done or omission made by its employees or the services availed of by the Asset Management Company or its officials.

(5) Notwithstanding anything contained in any agreement or even after the termination of any agreement, the 'Mutual Fund Asset Management Company' or its directors or other officers shall not be absolved of liability for such acts regarding the Mutual Fund, even if they were performed while residing on their premises, nor shall they be absolved of liability for errors made while performing acts.

(6) The Chief Executive Officer [whether program or otherwise] of the 'Mutual Fund Asset Management Company' shall ensure that the Mutual Fund complies with the provisions of the regulations and the directions or circulars issued by the Board from time to time, and that the investments made by the Fund Managers are made keeping in mind the interests of the investors, and also that the responsibility for the entire risk management system at the level of the Mutual Fund shall be of the same.

(7) The Chief Executive Officer [whether program or otherwise] shall also ensure that the 'Mutual Fund Asset Management Company' has adequate systems to ensure that the Code of Conduct prescribed for Fund Managers and Dealers in Part B of the Fifth Schedule of the regulations is properly complied with. If any violation of this Code of Conduct is found, the responsibility shall be of the Board of Directors of the 'Mutual Fund Asset Management Company' and its Trustees.

(8) Fund Managers [whether program or otherwise] shall comply with the Code of Conduct prescribed for Fund Managers and Dealers in Part B of the Fifth Schedule of the regulations, and shall provide quarterly confirmation to the Trustees that they have complied with the aforementioned Code of Conduct or list the specific instances where they have not complied (if any).

Clarification: For the purpose of this sub-regulation, the term "Fund Managers" shall also include the Chief Investment Officer [whether program or otherwise].

(9) Dealers [whether program or otherwise] shall comply with the Code of Conduct prescribed for Fund Managers and Dealers in Part B of the Fifth Schedule of the regulations, and shall provide quarterly confirmation to the Trustees that they have complied with the aforementioned Code of Conduct or list the specific instances where they have not complied (if any).

(10) The Board of Directors of the 'Mutual Fund Asset Management Company' shall ensure that all acts of the 'Mutual Fund Asset Management Company' are in accordance with the provisions of the regulations.

(11) The Mutual Fund Asset Management Company shall not:

(a) purchase or sell any securities through any broker, such that the average of total purchases and sales of securities made under all its schemes by the Mutual Fund is 10 percent or more:

Provided that for the purpose of this clause, the redemption of units issued by the Mutual Fund and their distribution shall not be included in the total purchases and sales of securities, and such transactions shall not be included, as may be specified by the Board:

Provided further that the aforementioned limit of 10 percent shall apply for a block of three months.

(b) purchase or sell any securities through any other broker other than the broker mentioned in clause (a) of sub-regulation (11), such that the average of total purchases and sales of securities made under all its schemes by the Mutual Fund is 25 percent or more, unless the 'Mutual Fund Asset Management Company' demonstrates to the satisfaction of the Board that it is not prejudicial to the interests of the investors, and in such cases, it shall send quarterly reports of all investments to the Trustees:

Provided that for the purpose of this clause, such transactions shall not be included in the total purchases and sales of securities, as may be specified by the Board:

Provided further that the aforementioned limit of 25 percent shall apply for a block of three months.

(12) If the 'Mutual Fund Asset Management Company' enters into any transactions in securities with any of its associates (associates), a report of the same shall be submitted to the Trustees at its next meeting.

(13) If any company has made investments exceeding 5 percent of the NAV (Net Asset Value) of any scheme, then the responsibility for any investment made by that scheme or any other scheme of the same Mutual Fund in that company or its subsidiary companies shall be with the 'Mutual Fund Asset Management Company', which shall report the same to the Trustees, and also report the same in the annual accounts of the relevant schemes (stating the average of such investments), and this responsibility shall cease only when the difference between the investments made by that company in that scheme or by that scheme in that company or its subsidiary company is less than one year.

(14) The 'Mutual Fund Asset Management Company' shall:

(a) submit its detailed bio-data of all investors to the Trustees and the Board within fifteen days from the date of their appointment, and also report that they are directly held in the day-to-day companies; (b) report every six months whether there is any change in the interests of the investors, and if so, report the same; and (c) submit a quarterly report to the Trustees, containing details of purchases and sales of securities by the Mutual Fund, the Sponsor, or the group companies of the 'Mutual Fund Asset Management Company' (with appropriate averages).

(15) Each investor of the 'Mutual Fund Asset Management Company' shall submit the details of his transactions (transactions) in securities to the Trustees on a quarterly basis, in accordance with the directions issued by the Board.

(16) The 'Mutual Fund Asset Management Company' shall not appoint any person to any major position who has been convicted of any financial offense or who has been involved in violation of any provisions related to securities.

(17) The 'Mutual Fund Asset Management Company' shall appoint such Registrar and Share Transfer Agents as may be registered with the Board:

Provided that if the work related to transfer of units is done at the internal level, then the amount charged for this work may be shown as an expense of the scheme, and if a higher amount is shown as an expense and deducted from the scheme's account, prior approval shall be obtained from the Trustees, and the annual accounts shall also report why such higher amount was shown.

(18) The 'Mutual Fund Asset Management Company' shall comply with the Code of Conduct contained in Part A of the Fifth Schedule of the regulations.

(19) The 'Mutual Fund Asset Management Company' shall not carry out its business outside India, which includes placing listing fees, providing services to beneficiaries, and carrying out investment work.

(20) The 'Mutual Fund Asset Management Company' shall calculate the value of investments made by its scheme(s) and evaluate them in accordance with the guidelines provided in the First Schedule of the regulations regarding valuation of investments, and shall make the responsibility available to all.

(21) If any investor suffers any prejudice due to incorrect valuation, then the 'Mutual Fund Asset Management Company' and the Sponsor of the Mutual Fund shall compensate the investors and/or the scheme.

(22) The Board of Directors of the 'Mutual Fund Asset Management Company' shall exercise due diligence and pay full attention to the following:

(a) The Board of Directors of the 'Mutual Fund Asset Management Company' shall ensure that before launching any scheme, the 'Mutual Fund Asset Management Company':
(i) has a back office, dealing room, and adequate accounting system; (ii) has appointed all important persons (including Fund Managers) for the scheme(s), and the bio-data of the persons appointed (including their educational qualifications and experience in the securities market) shall be submitted to the Trustees within fifteen days from the date of their appointment; (iii) has appointed auditors to audit its books of accounts; (iv) has appointed a Compliance Officer, who shall keep a watch on whether the laws, Board or Central Government issued directions, circulars, notifications, etc., are being complied with or not, and whether investor complaints are being resolved or not; (v) has appointed a SEBI Registrar and Share Transfer Agent under the Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993, and has also prescribed guidelines for their functioning; (vi) has prepared a manual for compliance and also established an internal control system [including internal audit system]; (vii) has prescribed guidelines for the inclusion of brokers and market makers in the list; (viii) has obtained prior approval from the recognized Stock Exchange(s) wherever necessary, under the regulations, before listing the units for listing.

(b) The Board of Directors of the 'Mutual Fund Asset Management Company' shall ensure that:
(i) the 'Mutual Fund Asset Management Company' thoroughly verifies brokers before including them in the list, keeps a close watch on transactions in securities with brokers, and gives maximum work to the best brokers; (ii) the 'Mutual Fund Asset Management Company' does not provide any undue benefit to any associate (associate/affiliate) or deal with any associate of the 'Mutual Fund Asset Management Company' in such a manner that it causes prejudice to the interests of the beneficiaries; (iii) the 'Mutual Fund Asset Management Company' makes transactions that are in accordance with the regulations and relevant schemes; (iv) the transactions to be made by the Mutual Fund are in accordance with the provisions of the Trust Deed; (v) the 'Mutual Fund Asset Management Company' runs the Mutual Fund schemes in such a way that there is no conflict with other acts, and takes necessary action to ensure that the interests of the investors of any one scheme of the 'Mutual Fund Asset Management Company' are not prejudiced by any other scheme or any other act; (vi) the net worth of the 'Mutual Fund Asset Management Company' is reviewed every quarter, so as to ensure that the limit specified in regulation 86 is always maintained; (vii) agreements [such as agreements for custody services and agreements for transfer of securities] made to provide services are made keeping in mind the interests of the beneficiaries, and also kept a watch on whether the work is being carried out in accordance with these agreements; (viii) the 'Mutual Fund Asset Management Company' invests the amount of its net worth in such a manner that it does not cause any prejudice to the interests of the beneficiaries; (ix) complaints received from investors are reviewed from time to time and their resolution is done; (x) all service providers either have joint registration certificates from the Board or the relevant regulatory authority, or have joint registration certificates for providing such services; (xi) if any default occurs regarding the Mutual Fund, the responsibility shall be reported to the Board immediately; (xii) the reports submitted by the 'Mutual Fund Asset Management Company' to the Trustees shall be submitted only after thorough verification; (xiii) due diligence shall be exercised in such other matters as may be specified by the Board from time to time.

(23) If any serious irregularity is found in any scheme of the 'Mutual Fund Asset Management Company', then the Board of Directors of that 'Mutual Fund Asset Management Company' shall review whether that 'Mutual Fund Asset Management Company' has any need or not, and also shall not allow that 'Mutual Fund Asset Management Company' to launch new schemes.

(24) Along with the 'Mutual Fund Asset Management Company', the responsibility for the entire system regarding risk management at the level of the schemes of the Mutual Fund shall be of the Board of Directors of the 'Mutual Fund Asset Management Company'.

(25) The Board of Directors of the 'Mutual Fund Asset Management Company' shall pay special attention to the following matters (whichever are applicable):

(i) Investment Management Agreement (Investment Management Agreement) and the amount payable under this agreement, (ii) Service contracts entered into with associates (associates) and whether the 'Mutual Fund Asset Management Company' is charging higher fees from outside brokers for providing similar services, (iii) Appointment of independent directors at the 'Mutual Fund Asset Management Company', (iv) Whether the transactions made with investors [including transactions made with associates (associates)] are within the prescribed limits under the provisions, (v) How the selection of persons to fill the vacant positions of independent directors is being done and their evaluation, (vi) How the Code of Conduct, etc., is prescribed so that insider trading in securities cannot be done, (vii) Whether excessive fees or amounts are being charged to Sponsors (Sponsors), the 'Mutual Fund Asset Management Company', or any other person for providing services, (viii) Agreements made for the first time and subsequently for underwriting, (ix) Service contracts entered into with associates (associates) of the 'Mutual Fund Asset Management Company'.

[भाग III—खण् ड 4] भारत का रािपत्र : असाधारण 19 (26) जिस अि पालि अजधकारी (कं ्लायंस ऑदफसर) को उप-जिजियम (22) के खंड (क) के उप-खंड (iv) के अि सार जिय ि दकया िाए, िह उस मामले की सूचिा त रंत और स्ट्ियं बोडड को िेगा िहाँ उसे यह पता चले दक दकसी प्रािधाि का पालि िहीं दकया गया है। (27) ‘म्यूच अल फं ड लाइट असेट मैिेिमेंट कं पिी’ उसी तरह से और उसी उद्देश्य से एक यूजिटधारक सजमक्षण सजमजत का गिि करेगी, िैसा बोडड बताए । (28) म्यूच अल फं ड लाइट असेट मैिेिमेंट कं पिी, दकसी स्ट्कीम के यूजिटधारकों के जलए, म्यूच अल फं ड लाइट को अिा की िािे िाली रकम और म्यूच अल फं ड लाइट में प्राप्त होिे िाली रकम की गणिा, इि जिजियमों तथा न्यास जिलेख (रस्ट्ट डीड) के अि सार करेगी । (29) ‘म्यूच अल फं ड लाइट असेट मैिेिमेंट कं पिी’ यह स जिजित करेगी दक तब तक दकसी स्ट्कीम की ब जियािी जििेषताओं में या उसके न्यास (रस्ट्ट) में, िेय फीस और खचों आदि में कोई भी बिलाि ि दकया िाए और या दफर ऐसा कोई बिलाि ि दकया िाए जिससे दक स्ट्कीम में ब जियािी तौर पर कोई बिलाि हो िाए और जिससे यूजिटधारकों के जहतों पर असर पडे, िब तक दक – (i) दकए िािे िाले बिलाि की सूचिा जलजखत रूप मेंप्रत्येक यूजिटधारक को ि िे िी िाए और एक ऐसे अंग्रेिी िैजिक समाचारपत्र (जिसे िेिभर में पढ़ा िाता हो) में इस संबंध में एक जिज्ञापि िारी ि कर दिया िाए और साथ ही उस स्ट्थाि की भाषा में छपिे िाले उस समाचारपत्र में इस संबंध में एक जिज्ञापि िारी ि कर दिया िाए, िहाँ म्यूच अल फं ड का म ख्यालय जस्ट्थत हो; और (ii) यूजिटधारकों को मौिूिा ए.ए.िी. पर अपिा पैसा जिकालिे का जिकल्प ि प्रिाि कर दिया िाए, और जिसके जलए कोई ि ल्क (एजग्ज़ट लोड) ि जलया िाए । (30) ‘म्यूच अल फं ड लाइट असेट मैिेिमेंट कं पिी’ अपिे यहाँ एक ऐसी व्यिस्ट्था जिधाडररत करेगी (िैसा बोडड बताए), जिससे दक िहाँ कहीं भी बािार के गलत इस्ट्तेमाल की ग ंिाइि लग रही हो उि मामलों [जििमें रं ट-रलिंग के मामले और धोखाधडी करिे के इरािे से प्रजतभूजतयों (जसक्यूररटीज़) में लेििेि करिे के मामले भी िाजमल हैं] का पता लगाया िा सके और ऐसा करिे से रोका भी िा सके। (31) बािार के गलत इस्ट्तेमाल [जििमें रं ट-रलिंग के मामले और धोखाधडी करिे के इरािे से प्रजतभूजतयों (जसक्यूररटीज़) में लेििेि करिे के मामले भी िाजमल हैं] को रोकिे के जलए इस प्रकार ‘म्यूच अल फं ड लाइट असेट मैिेिमेंट कं पिी’ के यहाँ िो व्यिस्ट्था जिधाडररत की गई हो, उसकेअि सार प्रदक्रयाओं को अमल में लािे की जिम्मेिारी और ििाबिेही ‘म्यूच अल फं ड लाइट असेट मैिेिमेंट कं पिी’ (आजस्ट्त प्रबंध कं पिी) के म ख्य कायडपालक अजधकारी (चीफ एजग्ज़क्यूरटि ऑदफसर) या प्रबंध जििेिक (मैिेलिंग डायरेक्टर) या ऐसे ही अन्य ओहिे पर कायडरत दकसी िूसरे व्यजि और म ख्य अि पालि अजधकारी (चीफ कं ्लायंस ऑदफसर) की होगी । (32) ‘म्यूच अल फं ड लाइट असेट मैिेिमेंट कं पिी’ पिाडफाि करिे के संबंध में जलजखत रूप में िीजत जिधाडररत करेगी, उसके अि सार प्रदक्रयाओं को अमल में लाएगी और उसे कायम रखेगी, जिसके तहत,– (क) कमडचाररयों, जििेिकों, न्याजसयों (रस्ट्टी), और िूसरे स्ट्टेकहोल्डसड के जलए एक ऐसे गोपिीय माध्यम का प्रािधाि दकया िाए, जिसके िररए िे उि मामलों की िािकारी िे सकें, िहाँ धोखाधडी करिे के इरािे से या गलत तरीके अपिाकर क छ दकए िािे की आिंका हो या दफर जिजियमों (रेग्यूलेिन्स) के प्रािधािों या दकन्हीं अन्य कािूिी प्रािधािों आदि का उल्लंघि दकए िािे की कोई आिंका हो या दफर संचालि-व्यिस्ट्था (गििेंस) में कहीं
दकसी गडबडी की आिंका हो, और

20 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC.4] (ख) ऐसी प्रदक्रयाएँ जिधाडररत की िाएँ, जििसे दक पिाडफाि करिे िालों का पयाडप्त संरक्षण स जिजित हो सके । (33) ‘म्यूच अल फं ड लाइट असेट मैिेिमेंट कं पिी’ का जििेिक मंडल (जिसमेंउिकी कोई सजमजतयाँभी िाजमल हैं) की बैिकें उतिे-उतिे समय में होंगी, िैसा बोडड समय-समय पर बताए । (34) ‘म्यूच अल फं ड लाइट असेट मैिेिमेंट कं पिी’ का जििेिक मंडल िार्षडक आधार पर बोडड के पास,- (क) म्यूच अल फं ड लाइट के कायों आदि से संबंजधत एक ररपोटडप्रस्ट्त त करेगा; (ख) एक प्रमाणपत्र प्रस्ट्त त करेगा, जिसमें यह उल्लेख हो दक ‘म्यूच अल फं ड लाइट असेट मैिेिमेंट कं पिी’ का जििेिक मंडल इस बात से संत ष्ट है दक ‘म्यूच अल फं ड लाइट असेट मैिेिमेंट कं पिी’ के दकसी भी न्यासी, जििेिक और दकसी अहम पि पर बैिेव्यजि द्वारा सेल्फ-डीललंग दकए िािे और रं ट रलिंग दकए िािे के कोई मामले सामिे िहीं आए हैं; (ग) इस आिय का प्रमाणपत्र प्रस्ट्त त करेगा दक ‘म्यूच अल फं ड लाइट असेट मैिेिमेंट कं पिी’ िो भी स्ट्कीमें चला रही हैंउिका ‘म्यूच अल फं ड लाइट असेट मैिेिमेंट कं पिी’ के िूसरे कायों से कोई सरोकार िहीं है; और यदि ‘म्यूच अल फं ड लाइट असेट मैिेिमेंट कं पिी’ उस तरह के कोई कायड आदि कर रही हो जििका जिक्र जिजियम 88 के खंड (ख) मेंदकया गया है, तो ऐसे में उसिे यह स जिजित करिे के जलए पयाडप्त किम उिाए हों दक यूजिटधारकों के जहतों को क्षजत ि पहुंचे। ‘म्यूच अल फं ड लाइट असेट मैिेिमेंट कं पिी’ द्वारा कौि-कौि से कायड आदि दकए िािे पर पाबंिी होगी:
88. म्यूच अल फं ड लाइट असेट मैिेिमेंट कं पिी,-
(क) दकसी म्यूच अल फं ड लाइट के न्यासी के रूप में कायड िहीं करेगी; (ख) पूल्ड असेट्स को उसके द्वारा चलाए िा रहे पैजसि फं डों आदि में जििेि के जसलजसले में सलाहकार संबंधी सेिाएँ िेिे के जसिाय िूसरे कोई कायड आदि िहीं करेगी:
परंत यह दक खंड (ख) के तहत िो कायडआदि करिे की अि मजत िी गई है, िे कायड आदि असेट मैिेिमेंट कं पिी या तो स्ट्ियं या दफर अपिे सहयोगी कं पजियों (सजब्सजडयरी) केिररए तभी कर सके गी, िब,- (i) िह यह स जिजित कर लेदक अलग-अलग कायों की ििह से दकसी बडे जहत-जिरोध की जस्ट्थजत पैिा ि हो; (ii) इस बात की िािकारी (जडस्ट्क्लोज़र) दक कोई जहत-जिरोध िहीं है न्याजसयों को िे िी िाए और यूजिटधारकों को स्ट्कीम सूचिा िस्ट्तािेिेज़ (स्ट्कीम इन्फॉमेिि डॉक्यूमेंट) और अजतररि िािकारी के जििरण मेंिे िी िाए । (iii) यदि जहत-जिरोध को टालिा िाम मदकि हो िाए, तो िह यह स जिजित करेगी दक इसकी िािकारी (जडस्ट्क्लोज़र) िे िी िाए दक जहत-जिरोध की जस्ट्थजत पैिा कहाँसे हुई, इसकी ििह से जििेिकों के जहतों को दकस तरह का बडा खतरा हो सकता है या ि कसाि पहुँच सकता है और इसकेसाथ-साथ उसमें जिस्ट्तृत ब्यौरे भी िे दिए िाएँ; (iv) यह स जिजित कर लेदक अहम पि पर बैिा व्यजि जहतों के टकराि के जिस मामले के संबंध में कायडिाही कर रहा हो उस मामले में इस बात का ध्याि रखा िाए दक उसे िो पाररश्रजमक जमल रहा हो उसका दकसी भी तरह से कोई भी सरोकार उस कायड से होिे िाली आमििी से ि हो ।

[भाग III—खण् ड 4] भारत का रािपत्र : असाधारण 21 म्यूच अल फं ड लाइट स्ट्कीमें लािे की प्रदक्रया
89. (1) ‘म्यूच अल फं ड लाइट असेट मैिेिमेंट कं पिी’ म्यूच अल फं ड लाइट की कोई भी स्ट्कीम तब तक िहीं लाएगी, िब तक दक ‘म्यूच अल फं ड लाइट असेट मैिेिमेंट कं पिी’ का जििेिक मंडल म्यूच अल फं ड लाइट की िह स्ट्कीम लािे के संबंध में मंिूरी प्रिाि ि कर िे और बोडड के पास प्रस्ट्ताि िस्ट्तािेि (ऑफर डॉक्यूमेंट) की प्रजत प्रस्ट्त त ि कर िे।”
VII. चौथी अि सूची में, िब्ि तथा जचह्ि “िामजििेिि / िामजििेिि के रद्दकरण के जलए प्ररूप” हट िाएंगे।

प्रमोि राि, कायडपालक जििेिक
[जिज्ञापि-III/4/असा./764/2024-25]
पाि रट्पण :

भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) जिजियम, 1996, मूल जिजियम, का.आ. सं. 856(अ), 9 दिसम्बर 1996 को भारत के रािपत्र में प्रकाजित हुए थे ।
भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) जिजियम, 1996 तत्पिात्–
(1) 15 अप्रैल 1997 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (संिोधि) जिजियम, 1997, का.आ. सं. 327 (अ), द्वारा (2) 12 िििरी 1998 को भारतीय प्रजतभूजत और जिजिमय बोडड (पारस्ट्पररक जिध) (संिोधि) जिजियम, 1998, का.आ. सं. 32 (अ), द्वारा (3) 8 दिसम्बर 1999 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (संिोधि) जिजियम, 1999, का.आ. सं. 1223 (अ), द्वारा (4) 14 माचड2000 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (संिोधि) जिजियम, 2000, का.आ. सं. 235 (अ), द्वारा (5) 28 माचड2000 को भारतीय प्रजतभूजत और जिजिमय बोडड(प्रजतभूजत अपीलीय न्यायाजधकरण को अपील) (संिोधि) जिजियम, 2000, का.आ. सं. 278 (अ), द्वारा (6) 22 मई 2000 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (िूसरा संिोधि) जिजियम, 2000, का.आ. सं. 484 (अ), द्वारा (7) 23 िििरी 2001 को भारतीय प्रजतभूजत और जिजिमय बोडड (पारस्ट्पररक जिध) (संिोधि) जिजियम, 2001, का.आ. सं. 69 (अ), द्वारा (8) 29 मई 2001 को भारतीय प्रजतभूजत और जिजिमय बोडड(मध्यिर्तडयों द्वारा जिजिधाि सलाह) (संिोधि) जिजियम, 2001, का.आ. सं. 476 (अ), द्वारा (9) 23 ि लाई 2001 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (िूसरा संिोधि) जिजियम, 2001, का.आ. सं. 698 (अ), द्वारा

22 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC.4] (10) 20 फरिरी 2002 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (संिोधि) जिजियम, 2002, का.आ. सं. 219 (अ), द्वारा (11) 11 िूि 2002 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (िूसरा संिोधि) जिजियम, 2002, का.आ. सं. 625 (अ), द्वारा (12) 30 ि लाई 2002 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (तीसरा संिोधि) जिजियम, 2002, का.आ. सं. 809 (अ), द्वारा (13) 9 जसतम्बर 2002 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (चौथा संिोधि) जिजियम, 2002, का.आ. सं.956 (अ), द्वारा (14) 27 जसतम्बर 2002 को भारतीय प्रजतभूजत और जिजिमय बोडड(िांच अजधकारी द्वारा िांच करिे और िाजस्ट्त अजधरोजपत करिे के जलए प्रदक्रया) जिजियम, 2002, का.आ. सं.1045 (अ), द्वारा (15) 29 मई 2003 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (संिोधि) जिजियम, 2003, का.आ. सं.632 (अ), द्वारा (16) 12 िििरी 2004 को भारतीय प्रजतभूजत और जिजिमय बोडड (पारस्ट्पररक जिध) (संिोधि) जिजियम, 2004, फा.सं. भाप्रजिबो/जिकाजि/िीप्र/4/2004, द्वारा (17) 10 माचड 2004 को भारतीय प्रजतभूजत और जिजिमय बोडड(उपय ि तथा उजचत व्यजि के जलए माििंड) जिजियम, 2004, का.आ. सं. 398 (अ), द्वारा (18) 12 िििरी 2006 को भारतीय प्रजतभूजत और जिजिमय बोडड (पारस्ट्पररक जिध) (संिोधि) जिजियम, 2006, का.आ. सं. 38(अ), द्वारा (19) 22 मई 2006 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (िूसरा संिोधि) जिजियम, 2006, का.आ. सं. 783(अ), द्वारा (20) 3 अगस्ट्त 2006 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (तीसरा संिोधि) जिजियम, 2006, का.आ. सं. 1254(अ), द्वारा (21) 27 दिसम्बर 2006 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (चौथा संिोधि) जिजियम, 2006, फा. सं. भाप्रजिबो/जिकाजि/िीप्र/82534/2006, द्वारा (22) 27 दिसम्बर 2006 को भारतीय प्रजतभूजत और जिजिमय बोडड (पारस्ट्पररक जिध) (पाँचिाँ संिोधि) जिजियम, 2006, फा. सं. भाप्रजिबो/जिकाजि/िीप्र/83065/2006, द्वारा (23) 28 मई 2007 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (संिोधि) जिजियम, 2007, फा. सं. 11/एलसी/िीएि/2007/2518, द्वारा (24) 31 अिू बर 2007 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (िूसरा संिोधि) जिजियम, 2007, फा. सं. 11/एलसी/िीएि/2007/4646, द्वारा (25) 31 माचड 2008 को भारतीय प्रजतभूजत और जिजिमय बोडड (फीस का संिाय) (संिोधि) जिजियम, 2008,फा.सं.11/एलसी/िीएि/2008/21669, द्वारा

[भाग III—खण् ड 4] भारत का रािपत्र : असाधारण 23 (26) 16 अप्रैल 2008 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (संिोधि) जिजियम, 2008, फा. सं.एलएिी-एिआरओ/िीएि/2008/03/123042, द्वारा (27) 22 मई 2008 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (िूसरा संिोधि) जिजियम, 2008, सं. एल.ए.डी.-एि.एि.ओ./िी.एि./2008/09/126202, द्वारा (28) 29 जसतम्बर 2008 को भारतीय प्रजतभूजत और जिजिमय बोडड (पारस्ट्पररक जिध) (तीसरा संिोधि) जिजियम, 2008, सं. एलएडी-एिआरओ/िीएि/2008/24/ 139426, द्वारा (29) 8 अप्रैल 2009 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (संिोधि) जिजियम, 2009, सं. एल.ए.डी.-एि.आर.ओ./िी.एि./2009-10/01/ 159601, द्वारा (30) 5 िूि 2009 को भारतीय प्रजतभूजत और जिजिमय बोडड (पारस्ट्पररक जिध) (िूसरा संिोधि) जिजियम, 2009, सं. एल.ए.डी.-एि.आर.ओ./िी.एि./2009-10/07/165404, द्वारा (31) 29 ि लाई 2010 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (संिोधि) जिजियम, 2010, सं. एलएडी-एिआरओ/िीएि/2010-11/13/13945, द्वारा (32) 30 अगस्ट्त 2011 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (संिोधि) जिजियम, 2011, फा. सं. एल.ए.डी.-एि.आर.ओ./िी.एि./2011-12/22/27668, द्वारा (33) 21 फरिरी 2012 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (संिोधि) जिजियम, 2012, सं. एलएडी-एिआरओ/िीएि/2011-12/38/4290, द्वारा (34) 26 जसतम्बर 2012 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (िूसरा संिोधि) जिजियम, 2012, सं. एल.ए.डी.-एि.आर.ओ./िी.एि./2012-13/17/21502, द्वारा (35) 16 अप्रैल 2013 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (संिोधि) जिजियम, 2013, सं.एल.ए.डी.-एि.आर.ओ./िी.एि./2013-14/03/5652, द्वारा (36) 19 िूि 2013 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (िूसरा संिोधि) जिजियम, 2013, सं. एल.ए.डी.-एि.आर.ओ./िी.एि./2013-14/12/6108, द्वारा (37) 19 अगस्ट्त 2013 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (तीसरा संिोधि) जिजियम, 2013, सं. एल.ए.डी.-एि.आर.ओ./िी.एि./2013-14/18/6384, द्वारा (38) 6 मई 2014 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (संिोधि) जिजियम, 2014, सं. एलएडी/एिआरओ/िीएि/2014-15/01/1039, द्वारा (39) 23 मई 2014 को भारतीय प्रजतभूजत और जिजिमय बोडड(फीस का संिाय) (संिोधि) जिजियम, 2014, सं. एल.ए.डी.-एि.आर.ओ./िी.एि./2014-15/03/1089, द्वारा (40) 30 दिसम्बर 2014 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (िूसरा संिोधि) जिजियम, 2014, सं. एलएडी-एि.आर.ओ./िी.एि./2014-15/19/ 1973, द्वारा (41) 15 मई 2015 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (संिोधि) जिजियम, 2015, सं. सेबी-एि.आर.ओ./ओ.आई.ए.इ./िी.एि./2015-16/005, द्वारा

24 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC.4] (42) 12 फरिरी 2016 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (संिोधि) जिजियम, 2016, सं. सेबी/एल.ए.डी.एि.आर.ओ./िी.एि./2015-16/034, द्वारा (43) 15 फरिरी 2017 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (संिोधि) जिजियम, 2017, सं. सेबी/एल.ए.डी.-एि.आर.ओ./िी.एि./2016-17/031, द्वारा (44) 13 माचड 2018 को भारतीय प्रजतभूजत और जिजिमय बोडड(पारस्ट्पररक जिध) (संिोधि) जिजियम, 2018, सं. सेबी/एल.ए.डी.-एि.आर.ओ./िी.एि./2018/02, द्वारा (45) 30 मई 2018 को भारतीय प्रजतभूजत और जिजिमय बोडड (पारस्ट्पररक जिध) (िूसरा संिोधि) जिजियम, 2018, सं. सेबी/एल.ए.डी.-एि.आर.ओ./िी.एि./2018/14, द्वारा (46) 6 दिसम्बर 2018 को भारतीय प्रजतभूजत और जिजिमय बोडड (पारस्ट्पररक जिध) (तीसरा संिोधि) जिजियम, 2018, सं. सेबी/एल.ए.डी.-एि.आर.ओ./िी.एि./2018/50, द्वारा (47) 13 दिसम्बर 2018 को भारतीय प्रजतभूजत और जिजिमय बोडड (पारस्ट्पररक जिध) (चौथा संिोधि) जिजियम, 2018, सं. सेबी/एल.ए.डी.-एि.आर.ओ./िी.एि./2018/51, द्वारा (48) 1 िििरी 2019 को भारतीय प्रजतभूजत और जिजिमय बोडड (प्रजतभूजत अजभरक्षक) (संिोधि) जिजियम, 2018, सं. सेबी/एल.ए.डी.-एि.आर.ओ./िी.एि./2019/01, द्वारा (49) 26 अप्रैल 2019 को भारतीय प्रजतभूजत और जिजिमय बोडड (पारस्ट्पररक जिध) (संिोधि) जिजियम, 2019, सं. सेबी/एल.ए.डी.-एि.आर.ओ./िी.एि./2019/011, द्वारा (50) 23 जसतम्बर 2019 को भारतीय प्रजतभूजत और जिजिमय बोडड (पारस्ट्पररक जिध) (िूसरा संिोधि) जिजियम, 2019, सं. सेबी/एल.ए.डी.-एि.आर.ओ./िी.एि./2019/37, द्वारा (51) 6 माचड 2020 को भारतीय प्रजतभूजत और जिजिमय बोडड (पारस्ट्पररक जिध) (संिोधि) जिजियम, 2020, सं. सेबी/एल.ए.डी.-एि.आर.ओ./िी.एि./2020/07, द्वारा (52) 17 अप्रैल, 2020 को भारतीय प्रजतभूजत और जिजिमय बोडड (रेग्यूलेटरी सैंडबॉक्स) (संिोधि) जिजियम, 2020, सं. सेबी/एल.ए.डी.-एिआरओ/िीएि/2020/10, द्वारा (53) 29 अिू बर, 2020 को भारतीय प्रजतभूजत और जिजिमय बोडड (पारस्ट्पररक जिध) (िूसरा संिोधि) जिजियम, 2020, सं. सेबी/एल.ए.डी.-एि.आर.ओ./िी.एि./2020/39, द्वारा (54) 4 फरिरी, 2021 को भारतीय प्रजतभूजत और जिजिमय बोडड (पारस्ट्पररक जिध) (संिोधि) जिजियम, 2021, सं. सेबी/एल.ए.डी.-एि.आर.ओ./िी.एि./2021/08, द्वारा (55) 3 अगस्ट्त, 2021 को भारतीय प्रजतभूजत और जिजिमय बोडड (रेग्यूलेटरी सैंडबॉक्स) (संिोधि) जिजियम, 2021, सं. सेबी/एलएडी-एिआरओ/िीएि/2021/30, द्वारा (56) 5 अगस्ट्त, 2021 को भारतीय प्रजतभूजत और जिजिमय बोडड (पारस्ट्पररक जिध) (िूसरा संिोधि) जिजियम, 2021, सं. सेबी/एलएडी-एिआरओ/िीएि/2021/36, द्वारा (57) 9 ििम्बर, 2021 को भारतीय प्रजतभूजत और जिजिमय बोडड (पारस्ट्पररक जिध) (तीसरा संिोधि) जिजियम, 2021, सं. सेबी/एलएडी-एिआरओ/िीएि/2021/56, द्वारा

[भाग III—खण् ड 4] भारत का रािपत्र : असाधारण 25 (58) 25 िििरी, 2022 को भारतीय प्रजतभूजत और जिजिमय बोडड (पारस्ट्पररक जिध) (संिोधि) जिजियम, 2022, सं. सेबी/एल.ए.डी.-एि.आर.ओ./िी.एि./2022/70, द्वारा (59) 3 अगस्ट्त, 2022 को भारतीय प्रजतभूजत और जिजिमय बोडड (पारस्ट्पररक जिध) (िूसरा संिोधि) जिजियम, 2022, सं. सेबी/एल.ए.डी.-एि.आर.ओ./िी.एि./2022/92, द्वारा (60) 16 ििम्बर, 2022 को भारतीय प्रजतभूजत और जिजिमय बोडड (पारस्ट्पररक जिध) (तीसरा संिोधि) जिजियम, 2022, सं. सेबी/एल.ए.डी.-एि.आर.ओ./िी.एि./2022/106, द्वारा (61) 7 फरिरी, 2023 को भारतीय प्रजतभूजत और जिजिमय बोडड (फीस का भ गताि और भ गताि का माध्यम) (संिोधि) जिजियम, 2023, सं. सेबी/एल.ए.डी.-एि.आर.ओ./िी.एि./2023/121, द्वारा (62) 27 िूि, 2023 को भारतीय प्रजतभूजत और जिजिमय बोडड (पारस्ट्पररक जिध) (संिोधि) जिजियम, 2023, सं. सेबी/एल.ए.डी.-एि.आर.ओ./िी.एि./2023/134, द्वारा (63) 3 ि लाई, 2023 को भारतीय प्रजतभूजत और जिजिमय बोडड (जििाि स लझािे की िैकजल्पक व्यिस्ट्था) (संिोधि) जिजियम, 2023, सं. सेबी/एलएडी-एिआरओ/िीएि/2023/137, द्वारा (64) 17 अगस्ट्त, 2023 को भारतीय प्रजतभूजत और जिजिमय बोडड (जिकायत जििारण व्यिस्ट्था को स जिधाििक बिािा) (संिोधि) जिजियम, 2023, सं. सेबी/एलएडी-एिआरओ/िीएि/2023/146, द्वारा (65) 2 ि लाई, 2024 को भारतीय प्रजतभूजत और जिजिमय बोडड (पारस्ट्पररक जिध) (संिोधि) जिजियम, 2024, सं. सेबी/एलएडी-एिआरओ/िीएि/2024/188, द्वारा (66) 1 अगस्ट्त, 2024 को भारतीय प्रजतभूजत और जिजिमय बोडड (पारस्ट्पररक जिध) (िूसरा संिोधि) जिजियम, 2024, सं. सेबी/एलएडी-एिआरओ/िीएि/2024/197, द्वारा संिोजधत हुए थे ।

26 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC.4] SECURITIES AND EXCHANGE BOARD OF INDIA NOTIFICATION Mumbai, the 16th December, 2024 SECURITIES AND EXCHANGE BOARD OF INDIA (MUTUAL FUNDS) (THIRD AMENDMENT) REGULATIONS, 2024 No. SEBI/LAD-NRO/GN/2024/221.—In exercise of the powers conferred by section 30 read with clause (c) of sub-section (2) of section 11 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following regulations to further amend the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, namely—

These Regulations may be called the Securities and Exchange Board of India (Mutual Funds) (Third Amendment) Regulations, 2024.
They shall come into force on the date of their publication in the Official Gazette:
Provided that sub-regulations I, II and VI of regulation 3 of these amendment regulations shall come into force on the ninetieth day from the date of their publication in the Official Gazette:
Provided further that sub-regulations IV and V of regulation 3 of these amendment regulations shall come into force with effect from April 1, 2025.
In the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996,—
I. in Chapter II, in regulation 11, after the words and symbol “in regulation 7”, the words and symbol “or regulation 81” shall be inserted.
II. in Chapter IV, in regulation 23, after the words and symbol “in regulation 21”, the words and symbol “and regulation 86” shall be inserted.
III. In regulation 29A,-
(i) in sub-regulation (1), the words “in the manner specified in Fourth Schedule” shall be substituted with the words “in the manner as may be specified from time to time”. (ii) the existing sub-regulation (2) shall be renumbered as sub-regulation (3). (iii) after sub-regulation (1), the following sub-regulation shall be inserted, namely:
“ (2) The unitholder shall have an option to nominate, in the manner as may be specified, a person who shall be authorized to conduct transactions on behalf of the unitholder in the event of the incapacitation of the unitholder.” (iv) after sub-regulation (3), the following sub-regulation shall be inserted, namely:
“ (4) An asset management company or its registrar to an issue and share transfer agent shall not be liable for any action taken on the basis of nomination made by the unitholder.”
IV. in Chapter VI, in regulation 43, after sub-regulation (7), the following sub-regulation shall be inserted, namely, —
“ (8) Moneys collected under the investment strategies of a Specialized Investment Fund shall be invested in accordance with regulation 49Z.”
V. After chapter VI-B, the following chapter and regulations shall be inserted, namely,—
“CHAPTER VI-C
SPECIALIZED INVESTMENT FUND
Definitions:
49U. For the purposes of this Chapter, unless the context otherwise requiresa) “Accredited Investor” shall have the same meaning as assigned to it in clause (ab) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012; b) “Specialized Investment Fund” means a mutual fund as defined under clause (q) of sub-regulation (1) of regulation 2 of these regulations and subject to such other conditions as specified under this chapter:
Provided that a mutual fund registered under regulation 9 shall not be required to establish a separate trust for launching any Investment Strategy under the Specialized Investment Fund. c) “Investment Strategy” means a scheme of mutual fund launched under the Specialized Investment Fund. Applicability:
49V. (1) The provisions of this Chapter shall apply to a Specialized Investment Fund.
(2) Unless the context otherwise requires, all other provisions of these regulations and the guidelines and circulars issued thereunder shall apply to a Specialized Investment Fund and the investment strategies launched under it, the trustees and the asset management companies in relation to such investment strategies, except where specific provisions are made in relation thereto under this Chapter. Approval requirements:
49W. (1) A mutual fund registered under regulation 9 may be granted an approval to establish a Specialized Investment Fund subject to fulfilling such eligibility criteria and in the manner, as may be specified by the board. Conditions for Specialized Investment Fund:
49X. (1) A Specialized Investment Fund shall not accept from an investor, an investment amount less than ten lakh rupees across all investment strategies in the manner as may be specified by the Board:
Provided that the requirement of minimum investment amount shall not apply to an accredited investor.
(2) The Fund Manager of Specialized Investment Funds shall have the relevant NISM certification as may be specified by the Board from time to time.
(3) All provisions applicable to the schemes of a mutual fund under these regulations shall also apply to the Investment Strategies launched under the Specialized Investment Fund, unless otherwise specified. Procedure for launching of investment strategies:
49Y. (1) The investment strategies under the Specialized Investment Fund shall be launched in accordance with the procedure applicable to the schemes of the mutual funds, as laid down in regulation 28:
Provided that a Specialized Investment Fund may launch such investment strategies in the manner as may be specified by the Board from time to time.
(2) An investment strategy under the Specialized Investment Fund shall be launched as an open-ended investment strategy or close-ended investment strategy or interval investment strategy with subscription and redemption frequency appropriately disclosed in the offer document. (3) The fees and expenses for the investment strategies launched under the Specialized Investment Fund shall be in accordance with regulation 52 of these regulations. Permissible investments:
49Z. (1) Specialized Investment Fund may invest monies collected under any of its investment strategies in instruments permitted under sub-regulation (1) of regulation 43 for mutual funds schemes:
Provided that the manner of investment by a Specialized Investment Fund may be specified by the Board.
(2) Any investment to be made under sub-regulation (1) of regulation 49Z shall be invested subject to investment restrictions as specified under regulation 49AA.

28 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC.4] Restrictions on investments:
49AA. (1) An investment strategy under Specialized Investment Fund shall not invest more than 20 per cent of its NAV in debt instruments comprising money market instruments and non-money market instruments issued by a single issuer which are rated not below investment grade by a credit rating agency authorised to carry out such activity under the Act. Such investment limit may be extended to 25 per cent of the NAV of the investment strategy with the prior approval of the Board of Trustees and Board of Directors of the asset management company:
Provided that such limit shall not be applicable for investments in Government Securities, treasury bills and triparty repo on Government securities or treasury bills:
Provided further that investments within such limit can be made in mortgaged backed securitised debt which are rated not below investment grade by a credit rating agency registered with the Board:
Provided further that such limit shall not be applicable for investments in case of debt exchange traded funds or such other funds as may be specified by the Board from time to time. (2) No Specialized Investment Fund under all its investment strategies should own more than fifteen per cent of any company’s paid up capital carrying voting rights:
Provided that investment in the asset management company or the trustee company of a mutual fund shall be governed by clause (a) of sub-regulation (1) of regulation 7B:
Provided further that the limit mentioned in sub-regulation (2) above shall be inclusive of ten per cent limit for mutual fund schemes as specified under clause 2 of Seventh Schedule. Explanation: If a mutual fund under all its schemes owns ten per cent of any company’s paid up capital carrying voting rights, then the Specialized Investment fund under all its investment strategies shall not own more than five per cent of that company’s paid up capital carrying voting rights. (3) No investment strategy of a Specialized Investment Fund shall invest more than 10 per cent of its NAV in the equity shares and equity-related instruments of any company. (4) A Specialized Investment Fund may invest in the units of REITs and InvITs subject to the following:
(a) No Specialized Investment Fund under all its investment strategies shall own more than 20 per cent of units issued by a single issuer of REIT and InvIT:
Provided that the limit mentioned in clause (a) of sub-regulation 4 above shall be inclusive of 10 per cent limit for mutual fund scheme as specified under clause 13 (a) of Seventh
Schedule.
(b) An investment strategy under Specialized Investment Fund shall not invest - (i) more than 20 per cent of its NAV in the units of REITs and InvITs; and (ii) more than 10 per cent of its NAV in the units of REIT and InvIT issued by a single issuer:
Provided that the limits mentioned in sub-clauses (i) and (ii) above shall not be applicable for investments in case of index fund or sector or industry specific scheme pertaining to REIT and InvIT. (5) All other investment restrictions applicable for schemes of mutual funds as specified under Seventh Schedule shall apply to investment strategies under the Specialized Investment Fund. Duties of Asset Management Company:
49AB. (1) The asset management company shall ensure that the Specialized Investment Fund has distinct identification, separate from that of the Mutual Fund, to maintain clear differentiation between the offerings of the Specialized Investment Fund and that of a Mutual Fund.

[भाग III—खण् ड 4] भारत का रािपत्र : असाधारण 29 (2) The asset management company shall comply with the provisions relating to branding, advertising, standard disclaimers, guidelines on usage of sponsor or asset management company or mutual fund’s brand name and maintenance of a separate website, as may be specified by the Board from time to time. Duties of trustees:
49AC. (1) The trustees shall ensure that the asset management company has the necessary expertise, internal control systems and risk management mechanism to invest in and manage investments. (2) The trustees shall ensure that the asset management company shall comply with such other requirements related to risk management, investor protection, disclosures and reporting, as may be specified by the Board from time to time. (3) The trustees shall ensure that all activities of the Specialized Investment Fund are in accordance with the provisions of these regulations. Disclosures in offer document and other disclosures:
49AD. (1) The offer documents of the Specialized Investment Fund shall contain disclosures which are adequate for investors to make informed investment decisions, highlighting the high-risk nature of the product, in the manner as may be specified by the Board. (2) The portfolio disclosures in respect of a Specialized Investment Fund shall be made in the manner as may be specified by the Board.”
VI. After Chapter X, the following new chapter shall be inserted, namely, -
“CHAPTER XI
MUTUAL FUNDS LITE
Definitions
79. (1) For the purposes of this Chapter, unless the context otherwise requires-
(a) “trustee” means a debenture trustee registered with the Board under the Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993:
Provided that in case an existing sponsor transfers its eligible passive schemes from its existing mutual fund to a mutual fund lite in accordance with regulation 82, the MF Lite asset management company may appoint the existing trustee of the mutual fund as the trustee of the mutual fund Lite. (b) “Mutual Fund Lite” or “MF Lite” means a mutual fund that has obtained registration under this Chapter and is having only such index funds, exchange traded funds, fund of funds or other mutual fund schemes as may be specified by the Board from time to time. (c) “Mutual Fund Lite asset management company” or “MF Lite asset management company” or “MF Lite AMC” means an asset management company of a Mutual Fund Lite that has been granted approval under this Chapter. (d) “Mutual Fund Lite scheme” or “MF Lite Scheme” means any scheme launched by a mutual fund lite or any other eligible passive scheme as may be specified by the Board from time to time. Applicability
80. (1) The provisions of this Chapter shall be applicable to Mutual Funds Lite and
Mutual Fund Lite Schemes.
(2) All other provisions of these regulations except the following provisions and the guidelines and circulars issues thereunder, unless the context otherwise requires, or is repugnant to the provisions of this Chapter, shall apply to a Mutual Fund Lite, Mutual

30 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC.4] Fund Lite schemes, and trustees and asset management companies in relation to such mutual funds and schemes:
i. regulation 7;
ii. regulation 14;
iii. regulation 15;
iv. regulation 16;
v. regulation 18;
vi. clause (f) and (g) of sub regulation (1) of regulation 21;
vii. clause (c) of regulation 22;
viii. regulation 24;
ix. regulation 25;
x. regulation 25A;
xi. sub regulation (1) of regulation 28;
xii. regulation 38A;
xiii. regulation 43A;
xiv. Chapter VIA;
xv. Chapter VIB;
xvi. regulation 59;
xvii. regulation 59A;
xviii. Third Schedule;
xix. Fourth Schedule; and
xx. Twelfth Schedule.
Eligibility Criteria
81. For the purpose of grant of certificate of registration as a Mutual Fund Lite, the
applicant has to fulfill the following requirements, namely (a) the sponsor should have a sound track record and general reputation of fairness and integrity in all business transactions. Explanation: For the purposes of this clause “sound track record” shall mean the sponsor should, — (i) ensure that the networth is positive in all the immediately preceding five years; and (ii) ensure that the positive liquid networth is more than the proposed capital contribution of the sponsor in the MF Lite asset management company and ensure that in case of change in control of the existing asset management company due to acquisition of shares, the positive liquid net worth of the sponsor or funds tied up by the sponsor is to the extent of aggregate par value or market value of the shares proposed to be acquired, whichever is higher; and (iii) have net profit after providing for depreciation, interest and tax in three out of immediately preceding five years including the fifth year; and (iv) have average net annual profit after depreciation, interest and tax during the immediately preceding five years of at least rupees five crore:
Provided that if the requirements specified under Explanation to clause (a) are not fulfilled, the sponsor shall,-

[भाग III—खण् ड 4] भारत का रािपत्र : असाधारण 31 (i) adequately capitalize the MF Lite asset management company such that the net worth of the said asset management company is not less than rupees seventy five crore; and (ii) ensure that the initial shareholding of sponsor equivalent to capital contributed to the MF Lite asset management company to the extent of not less than rupees seventy five crore is locked-in for a period of three years; and (iii) appoint experienced personnel in the MF Lite asset management company such that the total combined experience of Chief Executive Officer, Chief Operating Officer, Chief Compliance Officer and Chief Investment Officer shall be at least twenty years; and (iv) ensure that in case of acquisition of existing MF Lite asset management company, the sponsor shall have minimum positive liquid net worth equal to incremental capitalization required to ensure minimum capitalization of the MF Lite asset management company and the positive liquid net worth of the sponsor or the funds tied up by the sponsor are to the extent of aggregate par value or market value of the shares proposed to be acquired, whichever is higher; (v) ensure that in case of acquisition of stake in an existing MF Lite asset management company, the shareholding equivalent to at least rupees seventy five crore shall be locked in for three years. (vi) ensure that other conditions in this regard as may be specified by the Board from time to time are adhered to:
Provided further that a private equity fund or a pooled investment vehicle or a pooled investment fund may also be permitted to sponsor mutual funds lite subject to such other conditions as may be specified by the Board from time to time. (b) applicant is a fit and proper person by taking into account the criteria specified in
Schedule II of the Securities and Exchange Board of India (Intermediaries)
Regulations, 2008.
(c) in the case of an existing mutual fund, such fund is in the form of a trust and the trust deed has been approved by the Board; (d) the sponsor has contributed or contributes at least 40% to the net worth of the MF Lite asset management company:
Provided that any person who holds 40% or more of the net worth of a MF Lite asset management company shall be deemed to be a sponsor and will be required to fulfill the eligibility criteria specified in these regulations; (e) the sponsor or any of its directors or the principal officer to be employed by the MF Lite should not have been guilty of fraud or has not been convicted of an offence involving moral turpitude or has not been found guilty of any economic offence; (f) appointment of debenture trustees to act as trustees for the MF Lite in accordance with the provisions of the regulations; (g) appointment of MF Lite asset management company to manage the MF Lite and operate the scheme of such funds in accordance with the provisions of these regulations; (h) appointment of custodian in order to keep custody of the securities and such other assets held by the Mutual Fund Lite as may be specified by the Board, and provide such other custodial services as may be required for managing a Mutual Fund Lite.

32 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC.4] Norms for shareholding.
82. (1) Notwithstanding anything contained under regulation 7B of these regulations, a
sponsor shall be permitted to obtain a registration as a mutual fund under Chapter II of these regulations and a separate registration as a Mutual Fund Lite under this Chapter subject to conditions specified by the Board from time to time. (2) Notwithstanding anything contained under regulation 7B of these regulations, an existing sponsor under these regulations may transfer its passive scheme which is eligible as a mutual fund lite scheme from an existing mutual fund to a mutual fund lite belonging to a group entity of the same sponsor, subject to conditions as specified by the Board from time to time:
Provided that if an existing sponsor transfers its passive schemes from its existing mutual fund to a mutual fund lite, the existing mutual fund shall not launch any passive schemes that are eligible as mutual fund lite schemes after such transfer. (3) Notwithstanding anything contained under regulation 7B of these regulations, an existing shareholder holding 10% or more shareholding or voting rights in an existing asset management company of the mutual fund may be allowed to hold 10% or more shareholding or voting rights in a mutual fund lite asset management company belonging to a group entity of the same sponsor. (4) An existing mutual fund that intends to only launch mutual fund lite schemes may surrender its existing registration and migrate as a mutual fund lite under this Chapter subject to the conditions and the manner specified by the Board. Trust deed to be registered under the Registration Act
83. A mutual fund lite shall be constituted in the form of a trust and the instrument of trust
shall be in the form of a deed, as specified by the Board, duly registered under the provisions of the Registration Act, 1908 (16 of 1908), executed by the mutual fund lite asset management company in favor of the trustees named in such an instrument:
Provided that in case of disassociation of the sponsor, the signatory to the trust deed shall be as specified by the Board.
Appointment of trustee.
84. (1) Notwithstanding anything contained under regulation 7B of these regulations, a
debenture trustee may be appointed as a trustee of more than one mutual fund lite.
(2) The trustee of a mutual fund lite shall be an independent entity and not an associate of the sponsor or manager of the concerned mutual fund lite asset management company. (3) No debenture trustee shall be eligible to be appointed as a trustee under this
Chapter unless it meets the criteria for a fit and proper person specified under the
Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993.
Rights and obligations of the trustees.
85. (1) The trustees and the MF Lite asset management company shall enter into an
investment management agreement.
(2) The investment management agreement shall contain such clauses as may be specified by the Board and such other clauses as are necessary for the purpose of making investments. (3) The trustees shall be accountable for, and be the custodian of, the funds and property of the respective mutual fund lite schemes and shall hold the same in trust for the benefit of the unitholders in accordance with this chapter and the provisions of trust deed. (4) The trustee shall have satisfactory wherewithal with respect to infrastructure, personnel, systems etc. as may be required for the proper discharge of its duties under these regulations. (5) The trustee shall oversee activities of the mutual fund lite asset management company in the interest of the unitholders and obtain periodic reports on its activities

[भाग III—खण् ड 4] भारत का रािपत्र : असाधारण 33 and status of compliance with applicable regulations in the manner as may be specified by the Board.
(6) The trustees shall have the right to seek information from the mutual fund lite asset management companies in accordance with the trust deed.
(7) Where the trustees have reason to believe that the conduct of the business of the mutual fund lite is not in accordance with these regulations or detrimental to the interest of the unitholders, they shall forthwith take such remedial steps, as are necessary and shall immediately inform the Board of such conduct and the action taken by them. (8) The trustees shall periodically review the status of unit holders’ complaints and the redressal of the same by the mutual fund lite asset management company. (9) The trustee shall provide consent in case of change in control of the mutual fund lite asset management company. (10) The trustees shall ensure that mutual fund lite asset management company has not given any undue or unfair advantage to any associates or dealt with any of the associates of the mutual fund lite asset management company in any manner detrimental to interest of the unitholders. (11) Each trustee shall file the details of his transactions of dealing in securities with the Mutual Fund Lite within the time and manner as may be specified by the Board from time to time. (12) The trustees shall take steps to ensure that the transactions of the mutual fund lite are in accordance with the provisions of the trust deed. (13) The trustees shall obtain the consent of the unitholders— (a) whenever required to do so by the Board in the interest of the unitholders; or (b) whenever required to do so on the requisition made by three-fourths of the unitholders of any mutual fund lite scheme; or (c) when the majority of the trustees decide to wind up a scheme in terms of clause (a) of sub regulation (2) of regulation 39 or prematurely redeem the units of a close ended scheme. (14) The trustees shall call for the details of transactions in securities by the key personnel of the mutual fund lite asset management company in his own name or on behalf of the mutual fund lite asset management company and shall report to the Board, as and when required. (15) The trustees shall quarterly review all transactions carried out between the mutual fund lite, mutual fund lite asset management company and its associates. (16) The trustees shall ensure that there is no conflict of interest between the manner of deployment of its networth by the mutual fund lite asset management company and the interest of the unit- holders. (17) The trustees shall abide by the Code of Conduct as specified in PART-A of the Fifth Schedule. (18) The trustees shall give their comments on the report received from the mutual fund lite asset management company regarding the investments by the mutual fund lite in the securities of group companies of the sponsor. (19) The trustee shall ensure that the trust property is properly protected, held and administered by proper persons and by a proper number of such persons. (20) The trustees shall also exercise due diligence on such matters as may be specified by the Board from time to time. (21) Notwithstanding anything contained in
sub-regulations (1) to (20), the trustees shall not be held liable for acts done in good faith if they have exercised adequate due diligence and acted as per the terms of the trust deed.

34 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC.4] Networth requirement for the mutual fund lite asset management company.
86. (1) The mutual fund lite asset management company shall have a networth of not less
than rupees thirty five crore deployed in assets as may be specified by the Board:
Provided that the mutual fund lite asset management company may bring down the networth to rupees twenty five crore in case it has profits for five consecutive years. (2) Where the sponsor does not fulfil the requirements provided in part (i) to (iv) of the Explanation to clause (a) of regulation 81 of these regulations at the time of making application, the mutual fund lite asset management company shall have a networth of not less than rupees fifty crore deployed in assets as may be specified by the Board:
Provided that the mutual fund lite asset management company may bring down the networth to rupees twenty five crore in case it has profits for five consecutive years. Explanation: Any loans and advances given by a mutual fund lite asset management company to either sponsor, associates or group company of sponsor and associates or group company of mutual fund lite asset management company shall be excluded while computing the networth of the mutual fund lite asset management company. (3) The networth of the mutual fund lite asset management company as required under sub-regulation (1) or (2) of this regulation shall be maintained on a continuous basis and it shall be the responsibility of the sponsor to ensure the same. (4) Notwithstanding anything contained in sub-regulations (1) to (3), if the total assets under management of the mutual fund lite asset management company exceeds the specified thresholds, the mutual fund lite asset management company shall abide by the net worth requirements under Chapter IV of these Regulations. Mutual fund lite asset management company and its obligations
87. (1) The directors of a mutual fund lite asset management company shall be appointed
by the sponsor and the sponsor shall exercise diligence while making such appointments.
(2) The mutual fund lite asset management company shall take all reasonable steps and exercise due diligence to ensure that the investment of funds pertaining to any mutual fund lite scheme is not contrary to the provisions of these regulations and the trust deed. (3) The mutual fund lite asset management company shall obtain, wherever required under these regulations, prior in-principle approval from the recognized stock exchange(s) where units are proposed to be listed. (4) The mutual fund lite asset management company shall be responsible for the acts of commission or omission by its employees or the persons whose services have been procured by the asset management company. (5) Notwithstanding anything contained in any contract or agreement or termination, the mutual fund lite asset management company or its directors or other officers shall not be absolved of liability to the mutual fund lite for their acts of commission or omission, while holding such position or office. (6) The Chief Executive Officer (whatever be the designation) of the mutual fund lite asset management company shall ensure that the mutual fund lite complies with all the provisions of these regulations and the guidelines or circulars issued in relation thereto from time to time and that the investments made by the fund managers are in the interest of the unit holders and shall also be responsible for the overall risk management function of the mutual fund lite. (7) Chief Executive Officer (whatever be the designation) shall also ensure that the mutual fund lite asset management company has adequate systems in place to ensure that the Code of Conduct for Fund Managers and Dealers specified in PART - B of the Fifth Schedule of these regulations are adhered to in letter and spirit. Any breach of the said Code of Conduct shall be brought to the attention of the board of directors of the mutual fund lite asset management company and trustees.

[भाग III—खण् ड 4] भारत का रािपत्र : असाधारण 35 (8) The Fund Managers (whatever be the designation) shall abide by the Code of Conduct for Fund Managers and Dealers specified in PART - B of the Fifth Schedule of these regulations and submit a quarterly self-certification to the trustees that they have complied with the said code of conduct or list exceptions, if any. Explanation:- For the purposes of this sub-regulation, the phrase “Fund Managers” shall include Chief Investment Officer (whatever be the designation). (9) The Dealers (whatever be the designation) shall abide by the Code of Conduct for Fund Managers and Dealers specified in PART - B of the Fifth Schedule of these regulations and submit a quarterly self-certification to the trustees that they have complied with the said code of conduct or list exceptions, if any. (10) The board of directors of the mutual fund lite asset management company shall ensure that all the activities of the mutual fund lite asset management company are in accordance with the provisions of these regulations. (11) A mutual fund lite asset management company shall not:
(a) through any broker associated with the sponsor, purchase or sell securities, which is average of 10 per cent or more of the aggregate purchases and sale of securities made by the mutual fund lite in all its schemes:
Provided that for the purpose of this clause, the aggregate purchase and sale of securities shall exclude sale and distribution of units issued by the mutual fund lite and such other transactions as may be specified by the Board:
Provided further that the aforesaid limit of 10 per cent shall apply for a block of any three months.
(b) purchase or sell securities through any broker other than a broker referred to in clause (a) of sub-regulation (11) which is average of 25 per cent or more of the aggregate purchases and sale of securities made by the mutual fund lite in all its schemes, unless the mutual fund lite asset management company has recorded in writing the justification for exceeding the limit of 25 per cent and reports of all such investments are sent to the trustees on a quarterly basis:
Provided that for the purpose of this clause, the aggregate purchase and sale of securities shall exclude such transactions as may be specified by the Board:
Provided further that the aforesaid limit of 25 per cent shall apply for a block of three months.
(12) In case the mutual fund lite asset management company enters into any securities transactions with any of its associates a report to that effect shall be sent to the trustees at its next meeting. (13) In case any company has invested more than 5 per cent of the net asset value of a scheme, the investment made by that scheme or by any other scheme of the same mutual fund lite in that company or its subsidiaries shall be brought to the notice of the trustees by the MF lite asset management company and be disclosed in the annual accounts of the respective schemes with justification for such investment provided the latter investment has been made within one year of the date of the former investment calculated on either side. (14) The mutual fund lite asset management company shall file with the trustees and the Board— (a)detailed bio-data of all its directors along with their interest in other companies within fifteen days of their appointment; (b)any change in the interests of directors every six months; and (c)a quarterly report to the trustees giving details and adequate justification about the purchase and sale of the securities of the group companies of the sponsor or

36 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC.4] the mutual fund lite asset management company, as the case may be, by the mutual fund lite during the said quarter. (15) Each director of the mutual fund lite asset management company shall file the details of his transactions of dealing in securities with the trustees on a quarterly basis in accordance with guidelines issued by the Board. (16) The mutual fund lite asset management company shall not appoint any person as key personnel who has been found guilty of any economic offence or involved in violation of securities laws. (17) The mutual fund lite asset management company shall appoint registrars and share transfer agents who are registered with the Board:
Provided if the work relating to the transfer of units is processed in-house, the charges at competitive market rates may be debited to the scheme and for rates higher than the competitive market rates, prior approval of the trustees shall be obtained and reasons for charging higher rates shall be disclosed in the annual accounts. (18) The mutual fund lite asset management company shall abide by the Code of Conduct as specified in PART-A of the Fifth Schedule of these regulations. (19) The mutual fund lite asset management company shall not carry out its operations including trading desk, unit holder servicing and investment operations outside the territory of India. (20) The mutual fund lite asset management company shall compute and carry out valuation of investments made by its scheme(s) in accordance with the investment valuation norms specified in Eighth Schedule of these regulations, and shall publish the same. (21) The mutual fund lite asset management company and the sponsor of the mutual fund lite shall be liable to compensate the affected investors and/or the scheme for any unfair treatment to any investor as a result of inappropriate valuation. (22) The board of directors of the mutual fund lite asset management company shall exercise due diligence as follows:
(a) The board of directors of the mutual fund lite asset management company shall ensure before the launch of any scheme that the mutual fund lite asset management company has- (i) systems in place for its back office, dealing room and accounting; (ii) appointed all key personnel including fund manager(s) for the scheme(s) and submitted their bio-data which shall contain the educational qualifications and past experience in the securities market with the trustees, within fifteen days of their appointment; (iii) appointed auditors to audit its accounts; (iv) appointed a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications, guidelines, instructions, etc., issued by the Board or the Central Government and for redressal of investors grievances; (v) appointed a registrar to an issue and share transfer agent registered under the Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 and laid down parameters for their supervision; (vi) prepared a compliance manual and designed internal control mechanisms including internal audit systems; (vii) specified norms for empanelment of brokers and marketing agents; (viii) obtained, wherever required under these regulations, prior in principle approval from the recognized stock exchange(s) where units are proposed to be listed.

[भाग III—खण् ड 4] भारत का रािपत्र : असाधारण 37 (b) The board of directors of the mutual fund lite asset management company shall ensure that - (i) the mutual fund lite asset management company has been diligent in empanelling the brokers, in monitoring securities transactions with brokers and avoiding undue concentration of business with specific brokers; (ii) the mutual fund lite asset management company has not given any undue or unfair advantage to any associate or dealt with any of the associate of the mutual fund lite asset management company in any manner detrimental to interest of the unit holders; (iii) the transactions entered into by the mutual fund lite asset management company are in accordance with these regulations and the respective schemes; (iv) the transactions of the mutual fund lite are in accordance with the provisions of the trust deed; (v) the mutual fund lite asset management company has been managing the mutual fund schemes independently of other activities and have taken adequate steps to ensure that the interest of investors of one scheme are not being compromised with those of any other scheme or of other activities of the mutual fund lite asset management company. (vi) the networth of the mutual fund lite asset management company are reviewed on a quarterly basis to ensure compliance with the threshold provided in regulation 86 on a continuous basis; (vii) all service contracts including custody arrangements of the assets and transfer agency of the securities are executed in the interest of the unit holders and test checks of service contracts are arranged. (viii) there is no conflict of interest between the manner of deployment of the networth of the mutual fund lite asset management company and the interest of the unit holders; (ix) the investor complaints received are periodically reviewed and redressed; (x) all service providers are holding appropriate registrations from the Board or with the concerned regulatory authority; (xi) any special developments in the mutual fund lite are immediately reported to the Board; (xii) there has been exercise of due diligence on the reports submitted by the mutual fund lite asset management company to the trustees; (xiii) there has been exercise of due diligence on such matters as may be specified by the Board from time to time. (23) The board of directors of the mutual fund lite asset management company shall review the desirability or continuance of the mutual fund lite asset management company if substantial irregularities are observed in any of the schemes and shall not allow the mutual fund lite asset management company to float new schemes. (24) The Board of Directors of the mutual fund lite asset management company shall be responsible for the overall risk management of the mutual fund lite asset management company as well as the mutual fund lite schemes. (25) The independent directors of the mutual fund lite asset management company shall pay specific attention to the
following, as may be applicable, namely:— (i) the Investment Management Agreement and the compensation paid under the agreement,

38 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC.4] (ii) service contracts with associates and whether the mutual fund lite asset management company has charged higher fees than outside contractors for the same services, (iii) selections of the mutual fund lite asset management company’s independent directors, (iv) securities transactions involving associates to the extent such transactions are permitted, (v) selecting and nominating individuals to fill independent directors’ vacancies, (vi) code of ethics must be designed to prevent fraudulent, deceptive or manipulative practices by insiders in connection with personal securities transactions, (vii) the reasonableness of fees paid to sponsors, mutual fund lite asset management company and any others for services provided, (viii) principal underwriting contracts and their renewals, (ix) any service contract with the associates of the mutual fund lite asset management company. (26) The compliance officer appointed under sub-clause (iv) of clause (a) of subregulation (22) shall independently and immediately report to the Board any noncompliance observed by him. (27) The mutual fund lite asset management company shall constitute a Unit Holder Protection Committee in the form and manner and with a mandate as may be specified by the Board. (28) The mutual fund lite asset management company shall be responsible for calculation of any income due to be paid to the mutual fund lite and also any income received in the mutual fund lite, for the unit holders of any scheme of the mutual fund lite, in accordance with these regulations and the trust deed. (29) The mutual fund lite asset management company shall ensure that no change in the fundamental attributes of any scheme or the trust, fees and expenses payable or any other change which would modify the scheme and affect the interest of unit holders, shall be carried out unless,— (i) a written communication about the proposed change is sent to each unit holder and an advertisement is issued in one English daily newspaper having nationwide circulation as well as in a newspaper published in the language of region where the Head Office of the mutual fund is situated; and (ii) the unit holders are given an option to exit at the prevailing Net Asset Value without any exit load. (30) The MF Lite asset management company shall put in place an institutional mechanism, as may be specified by the Board, for the identification and deterrence of potential market abuse including front-running and fraudulent transactions in securities. (31) The Chief Executive Officer or Managing Director or such other person of equivalent or analogous rank and Chief Compliance Officer of the mutual fund lite asset management company shall be responsible and accountable for implementation of such an institutional mechanism for deterrence of potential market abuse, including front-running and fraudulent transactions in securities. (32) The mutual fund lite asset management company
shall establish, implement and maintain a documented whistle blower policy that shall — (a) provide for a confidential channel for employees, directors, trustees, and other stakeholders to raise concerns about suspected fraudulent, unfair or unethical practices, violations of regulatory or legal requirements or governance vulnerability, and (b) establish procedures to ensure adequate protection of the whistle blowers.

[भाग III—खण् ड 4] भारत का रािपत्र : असाधारण 39 (33) The board of directors of the mutual fund lite asset management company, including any of their committees, shall meet at such frequency as may be specified by the Board from time to time. (34) The board of directors of mutual fund lite asset management company shall furnish to the Board on a yearly basis, — (a) a report on the activities of the mutual fund lite; (b) a certificate stating that the board of directors of mutual fund lite asset management company have satisfied themselves that there have been no instances of self-dealing or front running by any of the trustees, directors and key personnel of the mutual fund lite asset management company; (c) a certificate to the effect that the mutual fund lite asset management company has been managing the schemes independently of any other activities and in case any activities of the nature referred to in clause (b) of regulation 88 have been undertaken by the mutual fund lite asset management company, it has taken adequate steps to ensure that the interests of the unitholders are protected. Restrictions on business activities of the mutual fund lite asset management company.
88. The mutual fund lite asset management company shall, -
(a) not act as a trustee of any mutual fund lite; (b) not undertake any business activities other than in the nature of advisory services to pooled assets only in respect of passive investments:
Provided that the asset management company may itself or through its subsidiaries undertake such activities, as permitted under clause (b), if, - (i) it ensures that there is no material conflict of interest across different activities; (ii) the absence of conflict of interest shall be disclosed to the trustees and unit holders in scheme information document and statement of additional information. (iii) there are unavoidable conflict of interest situations, it shall satisfy itself that disclosures are made of source of conflict, potential ‘material risk or damage’ to investor interests and detailed parameters for the same; (iv) it ensures independence to key personnel handling the relevant conflict of interest is provided through removal of direct link between remuneration to relevant asset management company personnel and revenues generated by that activity:
Procedure for launching of mutual fund lite schemes
89. (1) No mutual fund lite scheme shall be launched by the mutual fund lite asset
management company unless such mutual fund lite scheme is approved by the board of directors of the mutual fund lite asset management company and a copy of the offer document has been filed with the Board.”
VII. In the Fourth Schedule the ‘FORM FOR NOMINATION/CANCELLATION OF
NOMINATION’ shall be omitted.
PRAMOD RAO, Executive Director
[ADVT.-III/4/Exty./764/2024-25]
Footnote:

The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, the
Principal Regulations, were published in the Gazette of India on December 9, 1996 vide S.O. No. 856 (E).
The Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 were
subsequently amended–

40 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC.4] (1) On April 15, 1997 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 1997 vide S.O. No.327 (E). (2) On January 12, 1998 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 1998 vide S.O. No.32 (E). (3) On December 8, 1999 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 1999 vide S.O. No.1223 (E). (4) On March 14, 2000 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2000 vide S.O. No.235 (E). (5) On March 28, 2000 by the Securities and Exchange Board of India (Appeal to the Securities Appellate Tribunal) (Amendment) Regulations, 2000 vide S.O. No.278 (E). (6) On May 22, 2000 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2000 vide S.O. No.484 (E). (7) On January 23, 2001 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2001 vide S.O. No.69 (E). (8) On May 29, 2001 by the Securities and Exchange Board of India (Investment Advice by Intermediaries) (Amendment) Regulations, 2001 vide S.O. No.476 (E). (9) On July 23, 2001 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2001 vide S.O. No.698 (E). (10) On February 20, 2002 by the Securities and Exchange Board of India (Mutual Funds)(Amendment) Regulations, 2002 vide S.O. No.219 (E). (11) On June 11, 2002 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2002 vide S.O. No.625 (E). (12) On July 30, 2002 by the Securities and Exchange Board of India (Mutual Funds) (Third Amendment) Regulations, 2002 vide S.O. No.809 (E). (13) On September 9, 2002 by the Securities and Exchange Board of India (Mutual Funds) (Fourth Amendment) Regulations, 2002 vide S.O. No.956 (E). (14) On September 27, 2002 by the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 vide S.O. No.1045 (E). (15) On May 29, 2003 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2003 vide S.O. No. 632 (E). (16) On January 12, 2004 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2004 vide F.No. SEBI/LAD/DOP/4/2004. (17) On March 10, 2004 by the Securities and Exchange Board of India (Criteria for Fit and Proper Person) Regulations, 2004 vide S.O. No. 398 (E). (18) On January 12, 2006 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2006 vide S.O. No. 38 (E). (19) On May 22, 2006 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2006 vide S.O. No. 783 (E). (20) On August 3, 2006 by the Securities and Exchange Board of India (Mutual Funds) (Third Amendment) Regulations, 2006 vide S.O. No. 1254 (E). (21) On December 27, 2006 by the Securities and
Exchange Board of India (Mutual Funds) (Fourth Amendment) Regulations, 2006 vide F. No. SEBI/LAD/DOP/82534/2006. (22) On December 27, 2006 by the Securities and Exchange Board of India (Mutual Funds) (Fifth Amendment) Regulations, 2006 vide F. No. SEBI/LAD/ DOP/83065/2006. (23) On May 28, 2007 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2007 vide F. No. 11/LC/GN/2007/2518. (24) On October 31, 2007 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2007 vide F. No. 11/LC/GN/2007/4646. (25) On March 31, 2008 by the Securities and Exchange Board of India (Payment of Fees) (Amendment) Regulations, 2008 vide F. No. 11/LC/GN/2008/21669. (26) On April 16, 2008 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2008 vide F. No. LADNRO/ GN/2008/03/123042.

[भाग III—खण् ड 4] भारत का रािपत्र : असाधारण 41 (27) On May 22, 2008 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2008 vide no. LADNRO/GN/2008/09/126202. (28) On September 29, 2008 by the Securities and Exchange Board of India (Mutual Funds) (Third Amendment) Regulations, 2008 vide No. LADNRO/ GN/2008/24/139426. (29) On April 8, 2009 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2009 vide No. LAD-NRO/GN/2009-10/01/159601. (30) On June 5, 2009 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2009 vide No. LAD- NRO/GN/2009- 10/07/165404. (31) On July 29, 2010 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2010 vide No. LAD-NRO/GN/2010-11/13/13945. (32) On August 30, 2011 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2011 vide No. LAD-NRO/GN/2011-12/27668. (33) On February 21, 2012 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2012 vide No. LAD-NRO/GN/2011-12/38/4290. (34) On September 26, 2012 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2012 vide No. LAD-NRO/GN/2012- 13/17/21502. (35) On April 16, 2013 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2013 vide No. LAD-NRO/GN/2013-14/03/5652. (36) On June 19, 2013 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2013 vide No. LAD-NRO/GN/2013-14/12/6108. (37) On August 19, 2013 by the Securities and Exchange Board of India (Mutual Funds) (Third Amendment) Regulations, 2013 vide No. LAD-NRO/GN/2013-14/18/6384. (38) On May 6, 2014 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2014 vide No. LAD-NRO/GN/2014-15/01/1039. (39) On May 23, 2014 by the Securities and Exchange Board of India (Payment of Fees) (Amendment) Regulations, 2014 vide No. LAD-NRO/GN/2014-15/03/1089. (40) On December 30, 2014 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2014 vide No. LAD-NRO/GN/2014- 15/19/1973. (41) On May 15, 2015 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2015 No. NROOIAE/GN/2015-16/005. (42) On February 12, 2016 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2016 vide No. SEBI/LAD-NRO/GN/2015-16/034. (43) On February 15, 2017 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2017 vide No. SEBI/LAD/NRO/GN/2016-17/031. (44) On March 13, 2018 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2018 vide No. SEBI/LAD-NRO/GN/2018/02. (45) On May 30, 2018 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2018 vide No. SEBI/LAD-NRO/GN/2018/14. (46) On December 6, 2018 by
the Securities and Exchange Board of India (Mutual Funds) (Third Amendment) Regulations, 2018 vide No. SEBI/LAD-NRO/GN/2018/50. (47) On December 13, 2018 by the Securities and Exchange Board of India (Mutual Funds) (Fourth Amendment) Regulations, 2018 vide No. SEBI/LADNRO/GN/2018/51. (48) On January 1, 2019 by the Securities and Exchange Board of India (Custodian of Securities) (Amendment) Regulations, 2018 vide No. SEBI/LAD-NRO/GN/2019/01. (49) On April 26, 2019 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2019 vide No. SEBI/LAD-NRO/GN/2019/011. (50) On September 23, 2019 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2019 vide No. SEBI/LADNRO/GN/2019/37. (51) On March 6, 2020 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2020 vide No. SEBI/LAD-NRO/GN/2020/07.

42 THE GAZETTE OF INDIA : EXTRAORDINARY [PART III—SEC.4] (52) On April 17, 2020 by the Securities and Exchange Board of India (Regulatory Sandbox) (Amendment) Regulations, 2020 vide No. SEBI/LAD-NRO/GN/2020/10. (53) On October 29, 2020 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2020 vide No. SEBI/LAD-NRO/GN/2020/39. (54) On February 4, 2021 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2021 vide No. SEBI/LAD-NRO/GN/2021/08. (55) On August 3, 2021 by the (Regulatory Sandbox) (Amendment) Regulations, 2021 vide No. SEBI/LAD-NRO/GN/2021/30. (56) On August 5, 2021 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2021 vide No. SEBI/LAD-NRO/GN/2021/36. (57) On November 9, 2021 by the Securities and Exchange Board of India (Mutual Funds) (Third Amendment) Regulations, 2021 vide No. SEBI/LAD-NRO/GN/2021/56. (58) On January 25, 2022 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2022 vide No. SEBI/LAD-NRO/GN/2022/70. (59) On August 3, 2022 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2022 vide No. SEBI/LADNRO/GN/2022/92. (60) On November 16, 2022 by the Securities and Exchange Board of India (Mutual Funds) (Third Amendment) Regulations, 2022 vide No. SEBI/LADNRO/GN/2022/106. (61) On February 7, 2023, by the Securities and Exchange Board of India (Payment of Fees and Mode of Payment) (Amendment) Regulations, 2023 vide No. SEBI/LADNRO/GN/2023/121. (62) On June 27, 2023 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2023 vide No. SEBI/LAD-NRO/GN/2023/134. (63) On July 3, 2023, by the Securities and Exchange Board of India (Alternative Dispute Resolution Mechanism) (Amendment) Regulations, 2023 vide No. SEBI/LADNRO/GN/2023/137. (64) On August 17, 2023, by the Securities and Exchange Board of India (Facilitation of Grievance Redressal Mechanism) (Amendment) Regulations, 2023 vide No. SEBI/LAD-NRO/GN/2023/146. (65) On July 2, 2024 by the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2024 vide No. SEBI/LAD-NRO/GN/2024/188. (66) On August 2, 2024 by the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2024 vide No. SEBI/LAD-NRO/GN/2024/197. Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064 and Published by the Controller of Publications, Delhi-110054.

Lineage: In force