Sebi scraps entry load for MFs, cuts fees of intermediaries

Nifty BSE | NSE 29/05/12 Are Mutual Funds betting on Nifty?

The board decided that no listed companies can issue shares with superior voting rights. This is basically to avoid possible misuse by the persons who are in control of the company.

The board also decided to rationalize the disclosure norms for rights issue. One of the representations from the market was that the disclosure documents for rights issues tends to be extremely bulky because it is treated like a public issue, whereas that company is already listed and has continuing disclosure requirements. Investors know not only the price of the shares but also know the continuing disclosures. So, is it possible for us to simplify and reduce this document?

The board considered the question of the existing manner of payment to the mutual fund advisors by investors and decided that there will be no entry load for any schemes. The investor will decide the commission that he is to pay to the distributor directly. It will not be deducted by the fund and then paid to the distributor. If the investor is making an application for Rs 100 that means the entire Rs 100 will get invested. There will be no deduction from that because there is no entry load. The board also decided that if the distributor is selling different schemes then he must disclose to the investor as to what commission he is getting for different schemes. This will avoid the conflict of interest and will allow investors to understand why a particular scheme is being recommended to them.

The board decided to rationalize the fees that are charged to intermediaries in the market. These intermediaries include brokers, derivative trading members including the currency segment, mutual fund's filing fee, foreign institutional investors, sub-accounts of foreign institutional investors, foreign venture capital funds, and custodians of securities. Roughly the reduction is about 50% of what the existing fees are.