New Delhi, Jan 28: The Securities and Exchange Board of India has made it mandatory for trustees of mutual funds to obtain the consent of unit-holders when majority of trustees decide to wind up a scheme.
Now, the trustees will have to give notice within one day, disclosing the circumstances leading to the winding up of the scheme to the regulator as well as two daily newspapers having pan-India circulation, a SEBI notification said.
The move comes after the Supreme Court in July last year, in context of the winding-up of Franklin Templeton Mutual Fund’s six debt schemes, said that the trustees are required to seek consent of majority unit-holders for closing mutual fund schemes after publishing notice disclosing reasons for their decision to wind up schemes.
Besides, SEBI asked the MFs to follow Indian Accounting Standards (Ind AS) with effect from April 1, 2023.
“The financial statements and accounts of the mutual fund schemes shall be prepared in accordance with Indian Accounting Standards (IND AAS) and any addendum thereto, as notified by the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time,” the SEBI said in the notification.
Further, for the purposes of the financial statements, mutual funds shall mark all investments to market and carry investments in the balance sheet at market value.
“The realised gains or losses on sale or redemption of investment, as well as unrealised appreciation or depreciation shall be recognised in all financial statements through Revenue Accounts.”
However, since the unrealised gain arising out of appreciation on investments cannot be distributed, provision has to be made for exclusion of this item when arriving at distributable income.
Furthermore, the aggregate market value of investments in securities shall be stated separately in respect of each type of investment, such as equity shares, preference shares, convertible debentures listed on recognised stock exchange, non-convertible debentures or bonds further differentiating between those listed on recognised stock exchange and those privately placed.