{"id":253662,"date":"2021-09-04T10:52:03","date_gmt":"2021-09-04T05:22:03","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=253662"},"modified":"2021-09-04T10:54:46","modified_gmt":"2021-09-04T05:24:46","slug":"sebi-issues-circular-on-alignment-of-interest-of-asset-management-companies-amcs-with-the-unitholders-of-the-mutual-fund-schemes","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2021\/09\/04\/sebi-issues-circular-on-alignment-of-interest-of-asset-management-companies-amcs-with-the-unitholders-of-the-mutual-fund-schemes\/","title":{"rendered":"SEBI issues circular on alignment of interest of Asset Management Companies with the Unit-holders of the Mutual Fund Schemes"},"content":{"rendered":"<p style=\"text-align: justify;\">On September 02, 2021, the Securities and Exchange Board of India (SEBI) has issued a circular regarding the Alignment of interest of Asset Management Companies (\u2018AMCs\u2019) with the Unitholders of the Mutual Fund Schemes.<\/p>\n<div><\/div>\n<div>Regulation 25 of SEBI (Mutual Funds) Regulations,1996 (\u2018MF Regulations\u2019), asset management companies are required to invest such amount in such scheme(s) of the mutual fund, based on the risk associated with the scheme, as may be specified by the Board from time to time.<\/div>\n<p style=\"text-align: justify;\">Based on the risk value assigned to the scheme(s), AMCs\u00a0 are required to invest \u00a0minimum amount as a percentage of assets under management (\u2018AUM\u2019) in their scheme(s).<\/p>\n<p style=\"text-align: justify;\"><strong>\u00a0<\/strong><\/p>\n<div>Key points:<\/div>\n<ul>\n<li style=\"text-align: justify;\">Risk value of \u00a0the \u00a0scheme \u00a0as \u00a0per \u00a0the \u00a0risk-o-meter \u00a0of \u00a0the \u00a0immediate \u00a0preceding month shall be considered.<\/li>\n<li style=\"text-align: justify;\">Investment shall be maintained at all points of time till the completion of tenure of the scheme or till the scheme is wound up.<\/li>\n<li style=\"text-align: justify;\">AMCs shall, except in \u00a0case \u00a0of \u00a0close \u00a0ended \u00a0scheme(s), \u00a0conduct \u00a0a \u00a0quarterly \u00a0review to ensure compliance with the requirement of investment of minimum amount in the scheme(s) which may change either due to change in value of the AUM or in the risk value assigned to the scheme. Further, based on review of quarterly average AUM, shortfall in value of the investment in scheme(s), if any, \u00a0shall \u00a0be \u00a0made \u00a0good \u00a0within \u00a07 \u00a0days \u00a0of \u00a0such \u00a0review. \u00a0AMC shall \u00a0have \u00a0the \u00a0option to \u00a0withdraw \u00a0any \u00a0excess \u00a0investment \u00a0than \u00a0what \u00a0is \u00a0required pursuant \u00a0to \u00a0such review.<\/li>\n<li style=\"text-align: justify;\">AMCs \u00a0may \u00a0invest \u00a0from \u00a0their \u00a0net \u00a0worth \u00a0or \u00a0the \u00a0sponsor \u00a0may \u00a0fund \u00a0the \u00a0AMC \u00a0to \u00a0fulfil the aforesaid obligations, if required. However, the AMCs shall be required to \u00a0make \u00a0good \u00a0the \u00a0shortfall \u00a0in \u00a0the \u00a0minimum \u00a0net-worth to \u00a0comply \u00a0with \u00a0the \u00a0requirement of the MF Regulations in case of sustenance of temporary Mark to \u00a0Market \u00a0loss \u00a0for \u00a0two \u00a0consecutive quarters. AMC \u00a0shall \u00a0ensure \u00a0that \u00a0such \u00a0temporariness of the Mark to Market loss is certified by the statutory auditor.<\/li>\n<li style=\"text-align: justify;\">AMCs shall not be required to invest in ETFs, Index Funds, Overnight Funds, Funds \u00a0of \u00a0Funds \u00a0scheme(s) \u00a0 and in \u00a0case \u00a0of \u00a0close \u00a0ended \u00a0funds \u00a0wherein \u00a0the subscription \u00a0period \u00a0has \u00a0closed \u00a0as \u00a0on \u00a0date \u00a0of \u00a0coming \u00a0into \u00a0force \u00a0of \u00a0MF Amendment Regulations.<\/li>\n<li style=\"text-align: justify;\">Mandatory \u00a0contribution \u00a0already made by the AMCs \u00a0in \u00a0compliance \u00a0with \u00a0the \u00a0applicable MF Regulations shall not be withdrawn. However, such contribution can be adjusted against the investment required by the AMC as per this circular.<\/li>\n<\/ul>\n<p style=\"text-align: justify;\">\n","protected":false},"excerpt":{"rendered":"<p>On September 02, 2021, the Securities and Exchange Board of India (SEBI) has issued a circular regarding the Alignment of interest of <\/p>\n","protected":false},"author":8808,"featured_media":252507,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[4,1193],"tags":[],"class_list":["post-253662","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-legislationupdates","category-notifications"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.4 (Yoast SEO v26.4) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>SEBI issues circular on alignment of interest of Asset 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It is observed that there are frequent changes carried out in Total Expense Ratio (TER) and such changes are not prominently disclosed to investors. 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The provisions of this circular shall be applicable with effect\u2026","rel":"","context":"In &quot;Legislation Updates&quot;","block_context":{"text":"Legislation Updates","link":"https:\/\/www.scconline.com\/blog\/post\/category\/legislationupdates\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/08\/MicrosoftTeams-image-135.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/08\/MicrosoftTeams-image-135.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/08\/MicrosoftTeams-image-135.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/08\/MicrosoftTeams-image-135.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/08\/MicrosoftTeams-image-135.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":254934,"url":"https:\/\/www.scconline.com\/blog\/post\/2021\/09\/30\/sebi-issues-circular-on-swing-pricing-framework-for-mutual-fund-schemes\/","url_meta":{"origin":253662,"position":2},"title":"SEBI issues Circular on Swing pricing framework for mutual fund schemes","author":"Bhumika Indulia","date":"September 30, 2021","format":false,"excerpt":"On September 29, 2021, SEBI has issued a circular Swing pricing framework for mutual fund schemes. The Swing pricing framework was introduced for open ended debt mutual fund schemes (except overnight funds, Gilt funds and Gilt with 10-year maturity funds). The circular shall be applicable with effect from March 1,\u2026","rel":"","context":"In &quot;Legislation Updates&quot;","block_context":{"text":"Legislation Updates","link":"https:\/\/www.scconline.com\/blog\/post\/category\/legislationupdates\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/08\/MicrosoftTeams-image-135.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/08\/MicrosoftTeams-image-135.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/08\/MicrosoftTeams-image-135.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/08\/MicrosoftTeams-image-135.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/08\/MicrosoftTeams-image-135.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":122401,"url":"https:\/\/www.scconline.com\/blog\/post\/2017\/04\/11\/requirements-for-mutual-funds-investment\/","url_meta":{"origin":253662,"position":3},"title":"Requirements for Mutual Funds Investment","author":"Saba","date":"April 11, 2017","format":false,"excerpt":"The Securities and Exchange Board of India (SEBI) is mandated to protect the interests of investors in securities, and to promote the development of and to regulate the securities market. In pursuance of the same, SEBI has framed Regulations for the securities market, inter alia, to ensure that the interest\u2026","rel":"","context":"In &quot;Hot Off The Press&quot;","block_context":{"text":"Hot Off The Press","link":"https:\/\/www.scconline.com\/blog\/post\/category\/news\/hot_off_the_press\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":351868,"url":"https:\/\/www.scconline.com\/blog\/post\/2025\/06\/30\/sebi-mutual-fund-passive-breach-rebalancing-timeline-update\/","url_meta":{"origin":253662,"position":4},"title":"SEBI brings all Passive Breaches under one rebalancing framework","author":"Shubhi","date":"June 30, 2025","format":false,"excerpt":"Timelines for Rebalancing of Portfolios of Mutual Fund Schemes revised to encompass all Passive Breach categories.","rel":"","context":"In &quot;Legislation Updates&quot;","block_context":{"text":"Legislation Updates","link":"https:\/\/www.scconline.com\/blog\/post\/category\/legislationupdates\/"},"img":{"alt_text":"passive breaches","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/06\/passive-breaches.webp?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/06\/passive-breaches.webp?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/06\/passive-breaches.webp?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2025\/06\/passive-breaches.webp?resize=700%2C400&ssl=1 2x"},"classes":[]},{"id":258507,"url":"https:\/\/www.scconline.com\/blog\/post\/2021\/12\/14\/sebi-issues-circular-on-usage-of-pool-accounts-for-mutual-funds\/","url_meta":{"origin":253662,"position":5},"title":"SEBI issues Circular on usage of pool accounts for Mutual Funds","author":"Prachi Bhardwaj","date":"December 14, 2021","format":false,"excerpt":"The Securities and Exchange Board of India has issued a Circular on Mutual Funds on December 10, 2021. The representations were received from the industry highlighting the instances where pool accounts are used for mutual funds. The issue was discussed in Mutual Funds Advisory Committee (MFAC) & based on the\u2026","rel":"","context":"In &quot;Legislation Updates&quot;","block_context":{"text":"Legislation Updates","link":"https:\/\/www.scconline.com\/blog\/post\/category\/legislationupdates\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/08\/MicrosoftTeams-image-135.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/08\/MicrosoftTeams-image-135.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/08\/MicrosoftTeams-image-135.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/08\/MicrosoftTeams-image-135.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.scconline.com\/blog\/wp-content\/uploads\/2021\/08\/MicrosoftTeams-image-135.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]}],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/253662","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/users\/8808"}],"replies":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/comments?post=253662"}],"version-history":[{"count":0,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/posts\/253662\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media\/252507"}],"wp:attachment":[{"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/media?parent=253662"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/categories?post=253662"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.scconline.com\/blog\/wp-json\/wp\/v2\/tags?post=253662"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}