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Capital market regulator SEBI has halved the load-free exit window for investor to 15 days in case of change in control of AMC. The regulator has asked the AMCs to make necessary changes to facilitate implementation of the same before September.
Considering that growth in technological communication has enabled faster dissemination of information to unitholders, a request has been received from industry to review the timeline for exit option window period for change in control of AMC, said SEBI in a circular on Friday.
Per SEBI, when the control of an AMC changes hands, it is considered a change in fundamental attributes of the scheme. In line with the regulations, the investors in the mutual fund schemes are given an intimation. They are also given an exit load-free window of 30 days if they are not agreeing with the change and are keen to redeem their investments.
However, Though SEBI has now halved the exit window period, it has clarified that if this change leads to scheme consolidation or merger, investors must have the choice to exit at the current Net Asset Value without incurring any exit load. This option should be available for a period of at least 30 calendar days from the communication date.
Exercising their right to redeem their units in such an exit window is optional for the unitholders. A merger of schemes and change in the potential risk class matrix are some examples of change in the fundamental attribute of the scheme. A change of fund manager is not considered as a change in fundamental attribute of the scheme.
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