The Securities and Exchange Board of India (SEBI) has mandated various regulatory changes vide their Circular no. CIR/IMD/DF/21/2012 dated September 13, 2012 and SEBI (Mutual Funds) (Second Amendment) Regulations, 2012. These changes have come into effect from October 1, 2012. We have given an explanation of the changes below.
1. Applicability of NAV (for all schemes other than liquid schemes): |
a. For amount less than Rs.2 lacs
In respect of valid applications received* up to 3:00 p.m. by the Mutual Fund along with a local cheque or a demand draft payable at par at the place where the application is received, the closing NAV of the day on which application is received shall be applicable.
In respect of valid applications received* after 3:00 p.m. by the Mutual Fund along with a local cheque or a demand draft payable at par at the place where the application is received, the closing NAV of the next business day shall be applicable.
b. For amount Rs.2 lacs or more:
In respect of valid applications received* up to 3:00 p.m. by the Mutual Fund and the funds are available for utilisation on the same day before the cut-off time (3:00 p.m.) - the closing NAV of the day on which the funds are available for utilisation shall be applicable.
In respect of valid applications received* after 3:00 p.m. by the Mutual Fund and the funds are available for utilisation on the same day - the closing NAV of the Business Day following the day on which the funds are available for utilisation shall be applicable.
However, irrespective of the time of receipt of application, where the funds are not available for utilisation on the day of the application, the closing NAV of the Business Day on which the funds are available for utilisation before the cut-off time (3:00 p.m.) shall be applicable provided the application is received* prior to availability of the funds.
For determining the availability of funds for utilisation, the funds for the entire amount of subscription/purchase (including switch-in) as per the application should be credited to the bank account of the scheme before the cut-off time and the funds are available for utilisation before the cut-off time without availing any credit facility whether intra-day or otherwise, by the respective scheme. |
| *Received at the Official Points of Acceptance of Transactions of Franklin Templeton Mutual Fund |
2. Scheme Expenses (of open end funds):
In accordance with Regulations, the asset management company ("AMC") is entitled to charge the scheme with investment and advisory fees. In addition to such fees, the AMC may charge the scheme such expenses as may be permitted under Regulations from time to time. The maximum annual recurring expenses that can be charged to the Scheme, excluding issue or redemption expenses, whether initially borne by the mutual fund or by the asset management company, but including the investment management and advisory fee shall be within the limits stated in Regulations 52 read with SEBI circular no. CIR/IMD/DF/21/2012 dated September 13, 2012, as follows:
(I) Recurring expenses including the investment management and advisory fee subject to the limits specified in the table below (as % of daily net assets):
(a) In case of an index fund scheme - 1.50%;
(b) In case of a fund of funds scheme - 2.50% (including weighted average of charges levied by the underlying schemes); and
(c) In case of other schemes - |
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| Provided that such recurring expenses shall be lesser by at least 0.25% of the daily net assets outstanding in each financial year in respect of schemes investing in bonds. |
II) In addition to the above, the following costs or expenses may be charged to the Scheme, namely-
(a) brokerage and transaction costs which are incurred for the purpose of execution of trade and is included in the cost of investment, not exceeding 0.12% in case of cash market transactions and 0.05% in case of derivatives transactions; the securities transaction tax (STT) will continue to be included in the cost ofinvestment over and will not come under the limit of 0.12% mentioned above.
(b) expenses not exceeding 0.30% of daily net assets, if the new inflows from such cities as specified by SEBI from time to time are at least - (i) 30% of gross new inflows in the scheme, or; (ii) 15% of the average assets under management (year to date) of the scheme, whichever is higher.
Provided that if inflows from such cities are less than the higher of (i) or (ii) above, such expenses on daily net assets of the scheme shall be charged on proportionate basis.
Provided further that expenses charged under this clause shall be utilised for sales, marketing and distribution expenses incurred for bringing inflows from such cities.
Provided further that amount incurred as expense on account of inflows from such cities shall be credited back to the scheme in case the said inflows are redeemed within a period of one year from the date of investment;
(c) additional expenses not exceeding 0.20% of daily net assets of the scheme towards various permissible expenses. (III) The AMC may charge service tax on investment and advisory fees to the Scheme in addition to the maximum limit of annual recurring expenses as prescribed in Regulation 52. Further, the below mentioned expenses and charges shall be borne by the Scheme within the maximum limit of annual recurring expenses as prescribed in Regulation 52.
a) Service tax on expenses other than investment and advisory fees; and,
b) brokerage and transaction costs (including service tax) incurred for the purpose of execution of trade in excess of 0.12% in case of cash market transactions and 0.05% in case of derivatives transactions, if any. |
3. Suspension of Plans and Options (effective October 1, 2012): In terms of SEBI circular no. CIR/IMD/DF/21/2012 dated September 13, 2012, the sale of units (including switch-in) under some of the plans of the following Schemes will stand suspended w.e.f. October 01, 2012 (Monday). However, any subscription or switch-in application received on or after October 01, 2012 in the Plans being suspended will, by default, be deemed to have been received in the RETAINED Plan of the respective schemes and will be processed accordingly.
The names of the Plans in which sales will be SUSPENDED and the RETAINED Plans in which sales will be continued are given below:
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#All Options under the Suspended Plans will also be suspended
The minimum amounts for fresh purchase, additional purchase and redemption (including switches) in the retained plans of TITMA and TIUBF stand revised as follows: |
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