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SEBI has notified new rules to make mutual funds (MFs) pay separate interest on delayed dividends and redemption proceeds to the unit-holders.
The outer limit for MFs to pay redemption proceeds and dividend is 10-15 days, which was 30 days earlier. The interest on delayed dividend and redemption payment is 15 per cent per annum.
As per the notification issued on Thursday, every MF and asset management company (AMC) would be required to transfer the dividend payments and the redemption or repurchase proceeds to the unit-holders within a period specified by SEBI.
Payment of interest
In case of failure to transfer the proceeds within the specified period, the AMC would be liable to pay interest for the period of such delay to the unit-holders, it said.
“Notwithstanding payment of such interest to the unit-holders, the AMC may be liable for action for failure to transfer the redemption or repurchase proceeds or dividend payments within the stipulated time,” said SEBI.
It added that physical despatch of redemption or repurchase proceeds or dividend payments would be carried out only in exceptional circumstances and AMCs would be required to maintain records along with reasons for all such physical despatches.
Clearing corporation norms
Separately, the regulator has amended norms governing winding up of clearing corporations.
Every clearing corporation would be required to ensure that the new framework provides for the timely and orderly settlement or transfer of position and the transfer of the collateral, deposit, margin or any other asset of the members to another recognised clearing corporation that would take over the operations of the clearing corporation.
SEBI added, “If the Alternative Investment Fund fails to declare the first close of the scheme in the specified manner, it has to file a fresh application for launch of the scheme by paying the requisite scheme fee.”
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