Market regulator SEBI has made it mandatory for mutual fund trustees to acquire the consent of unit holders when a majority of trustees decide to wind up a scheme, in an effort to better protect the interests of mutual fund investors.
Mutual fund trustees will be required to get unitholder permission when a majority of trustees decide to wind up a scheme or prematurely redeem the units of a closed-ended scheme under the new rules.
SEBI said in a notification issued on Tuesday that the trustees must obtain unit holder consent by a simple majority of the unit holders present and voting on the basis of one vote per unit held, and publish the results of voting within 45 days of the publication of the notice of circumstances leading to winding up. If the trustees are unable to get consent, SEBI has stated that the plan will be open for business on the second working day following the publication of the voting results.
SEBI amended mutual fund regulations to require trustees to give notice within one day, disclosing the circumstances leading to the scheme's winding up to the regulator as well as two daily newspapers with national circulation and a vernacular newspaper circulating in the mutual fund's formation location.