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Last Updated : May 20, 2020 05:22 PM IST | Source:

SEBI allows listing of mutual fund units of schemes in process of winding up

This move will allow Franklin Templeton Mutual Fund to list their units for those investors who wish to exit.

Ajay Tyagi, chairman of SEBI (Reuters)
Ajay Tyagi, chairman of SEBI (Reuters)

The Securities and Exchange Board of India has allowed listing of mutual fund units of the schemes that are in the process of winding up on the stock exchanges with immediate effect.

This move will allow Franklin Templeton Mutual Fund to list their units for those investors who wish to exit.

On April 23, Franklin Templeton Mutual Fund had said it would wind up six schemes - Franklin India Low Duration Fund, Franklin India Dynamic Accrual Fund, Franklin India Credit Risk Fund, Franklin India Short Term Income Plan, Franklin India Ultra Short Bond Fund and Franklin India Income Opportunities Fund - citing severe illiquidity and redemption pressures caused by the COVID-19 pandemic.


SEBI has said that while the scheme undergoes the various steps towards winding up their units can be listed and traded on the stock exchanges as a means to provide an exit to investors.

“As per MF Regulations, there are several steps envisaged with respect to winding up  of  Mutual Fund schemes  before  the  scheme  ceases  to  exist. During  this process,  such  units  can  be  listed  and  traded  on  a  recognized  stock  exchange, which may provide an exit to investors,” SEBI said in a circular issued today.

However, pursuant  to  listing,  trading  on stock  exchange mechanism will  not  be mandatory  for  investors, but if they want they have an optional  channel to exit the scheme.

Trading in units of such a listed scheme that is under the process of winding up, will have to be in the dematerialised form,SEBI said.

SEBI further said that operational  modalities  for trading  and  settlement of units  of  MF schemes that are under the process of winding up, will be finalized by the stock exchanges where  units  of  such  schemes  are being listed in consultation with SEBI.

The operational modalities will include mechanism for order placement, execution, payment and settlement, Enabling bulk orders to be placed for trading in units.

It will also include issue related  to suspension  of  trading,  declaration  of  date  for determining  the eligibility  of unitholders  in  respect  of payments to  be  made  by  the  AMC as part of the winding up process and disclosures to be made by AMCs including disclosure of NAV on daily basis and scheme portfolio periodically.

SEBI has directed stock  exchanges to develop mechanism  along  with  RTA  for  trading  and settlement of such units held in the form of Statement of Account/ Unit Certificates.

The circular pointed out that the AMC,  its  sponsor,  employees  of  AMC  and  Trustee  will  not  be  allowed to transact  (buy  or  sell)  in  the  units  of  such  schemes  that  are  under  the  process  of being wound up. The compliance of the same shall be monitored both by the Board of AMC and Trustee.

SEBI stated that stock exchanges who wish to offer the listing facility for schemes that are being wound up to submit a detailed  operational  modalities  to SEBI, within seven days from May 20.



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First Published on May 20, 2020 04:57 pm
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