Its April 1 and a whole lot of regulatory changes are taking effect starting today. Apart from the key Income Tax changes, SEBI’s new guidelines for NFOs also come into effect starting today.
As per the Securities and Exchange Board of India (SEBI), Asset Management Companies (AMCs) have to deploy funds raised in New Fund Offers (NFOs) within 30 business days. The 30 days are going to be calculated from the allotment date.
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SEBI’s latest NFO guidelines have been framed with the objective to ensure that the funds are used for asset allocation as specified in the NFO’s Scheme Information Document (SID).
NFO: SEBI introduces 30-day deadline
The new guidelines reiterate that not only would AMCs have to specify fund allocation deadline, but also allocate funds as per the Scheme Document or SID. In case the AMC is not able to meet this 30-day, they must also provide a written explanation for the delay. This explanation has to be addressed to the SEBI’s Investment Committee with the key reasons that led to delay in fund deployment.
NFO: Is there any possibility to extend deadline
SEBI has also made provision for delays. In case the deployment is not done within 30 business days, it has grated the option for AMCs to seek another 1-month extension. But this is subject to an approval from the Investment Committee. The committee has been bestowed with the final say in terms of assessing the delay and reasons for it along with ground for granting an extension.
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