[10 May 2022] No.
SEBI/LAD-NRO/GN/2022/84.- In exercise of the powers conferred by section 30
read with section 11 and section 19 of the Securities and Exchange Board of
India Act, 1992 (15 of 1992), the Board hereby makes the following regulations
to further amend the Securities and Exchange Board of India (Collective
Investment Schemes) Regulations, 1999, namely- These regulations may
be called the Securities and Exchange Board of India (Collective Investment
Schemes) (Amendment) Regulations, 2022. They shall come into
force on the date of their publication in the Official Gazette: In the Securities and
Exchange Board of India (Collective Investment Schemes) Regulations, 1999,-
I.
In regulation 2,
sub-regulation (1), i.
clause (e) shall be
substituted with the following clause, namely, "(e)
"auditor" means a firm, including a limited liability partnership,
constituted under the Limited Liability Partnership Act, 2008, who is eligible
and qualified to audit the accounts of a company under section 141 of the
Companies Act, 2013 (18 of 2013)." ii.
after clause (e), the
following clause (ea) shall be inserted, namely,- "(ea)"designated
employees" of the Collective Investment Management Company includes: (i)
chief executive officer,
chief investment officer, chief risk officer, chief information security
officer, chief operation officer, fund manager, compliance officer, sales head,
investor relation officer, heads of other departments and dealer of the
Collective Investment Management Company; (ii)
persons directly reporting
to the chief executive officer (excluding personal assistant/ secretary); (iii)
fund management team and research
team; (iv)
other employees as
identified by Collective Investment Management Companies or trustees." iii.
in clause (h), after the
words, number and symbol "the Companies Act, 1956 (1 of 1956)" and
before the words "and registered", the words, number and symbol
"or the Companies Act, 2013 (18 of 2013)" shall be inserted. iv.
in clause (k), (a)
Sub-clauses (i) and (ii)
shall be substituted with the following, namely,- "(i)
in the case of a company, by any person individually or together with persons
acting in concert, who directly or indirectly own, control or hold shares
carrying not less than ten percent of the voting rights of such company; or (ii)
as between two companies, if the same person either individually or together
with persons acting in concert, directly or indirectly, own, control or hold
shares carrying not less than ten percent of the voting rights of each of the
two companies; or" (b)
in sub-clause (iii), before
the word "majority", the word "by" shall be inserted. v.
clause (n) shall be omitted. vi.
clause (p) shall be
substituted with the following clause, namely, "(p)"fraud"
means a fraud as defined in sub-clause (c) of sub-regulation (1) of regulation
2 of the Securities and Exchange Board of India (Prohibition of Fraudulent and
Unfair Trade Practices relating to Securities Market) Regulations, 2003;" vii.
clause (v) shall be
substituted with the following clause, namely,- "(v)"relative"
means a person as defined in section 2(77) of the Companies Act, 2013 (18 of
2013)." viii.
clause (aa) shall be
substituted with the following clause, namely,- "(aa)"securities
laws" means the Act, the Securities Contracts (Regulation) Act, 1956 (42
of 1956) and the Depositories Act, 1996 (22 of 1996), the provisions of any
other law to the extent it is administered by the Board and the relevant rules
and regulations made thereunder;"
II.
In regulation 2,
sub-regulation (3) shall be substituted with the following, namely,- "(3)
The words and expressions used and not defined in these regulations but defined
in the Act, the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the
Companies Act, 2013 (18 of 2013), the Depositories Act, 1996 (22 of 1996), or
any rules or regulations made thereunder shall have the same meanings
respectively assigned to them in those acts, rules or regulations made
thereunder or any statutory modification or reenactment thereto, as the case
may be."
III.
In regulation 9, clause (c)
shall be substituted with the following clause, namely,- "(c)
the applicant or its promoters should have a sound track record and general
reputation of fairness and integrity in all their business transactions. Explanation.- For the
purposes of this clause "sound track record" shall mean that, (i)
the applicant or its
promoter should be carrying on business in financial services or in the
relevant field, in which collective investment schemes are proposed to be
launched, for a period of not less than five years; (ii)
the networth of applicant or
its promoter is positive in all the immediately preceding five years; (iii)
the applicant or its
promoter has profits after providing for depreciation, interest and tax in
three out of the immediately preceding five years, including the fifth year;
and (iv)
the applicant has a net
worth of not less than rupees fifty crores on a continuous basis: Provided that the
applicant shall have a networth not less than rupees hundred crore till it has
profits for five consecutive years in case the requirements under sub-clause
(iii) of clause (c) of this regulation is not fulfilled;"
IV.
After regulation 9A, the
following shall be inserted, namely,- "9B
(1) No Collective Investment Management Company or a promoter of a Collective
Investment Management Company, their associates or group companies, through the
schemes of the Collective Investment Management Company or otherwise,
individually or collectively, directly or indirectly, have - (a)
ten percent or more of the
shareholding or voting rights in the Collective Investment Management Company
or the trustee company of any other Collective Investment Management Company;
or (b)
representation on the board
of the Collective Investment Management Company or the trustee company of any
other Collective Investment Management Company. (2)
Any shareholder holding ten percent or more of the shareholding or voting
rights in the Collective Investment Management Company or the trustee company
of a Collective Investment Management Company, shall not have, directly or
indirectly,- (a)
ten percent or more of the
shareholding or voting rights in the Collective Investment Management Company
or the trustee company of any other Collective Investment Management Company;
or (b)
representation on the board
of the Collective Investment Management Company or the trustee company of any
other Collective Investment Management Company: Provided that in the
event of a merger, acquisition, scheme of arrangement or any other arrangement
involving the promoters of the Collective Investment Management Company, shareholders
of the Collective Investment Management Company or trustee companies, their
associates or group companies which results in the incidental acquisition of
shares, voting rights or representation on the board of the Collective
Investment Management Company or trustee companies, this regulation shall be
complied with within a period of one year of coming into force of such an
arrangement."
V.
In regulation 14, i.
in clause (m), the symbol
"." shall be substituted with the symbol ";" ii.
after clause (m), the
following clause shall be inserted, namely,- "(n)
the Collective Investment Management Company and its designated employees shall
invest such amounts in such schemes of the Collective Investment Management
Company, as may be specified by the Board from time to time."
VI.
After sub-regulation (5) of
regulation 24, the following shall be inserted, namely,- "Closure of
subscription list “(6)
Each collective investment scheme shall immediately after the closure of the
subscription list comply with the following conditions, namely,- (a)
minimum subscription amount
of rupees twenty crore; (b)
minimum twenty investors;
and (c)
no person shall hold more
than twenty-five percent of the assets under management of scheme: Provided that where
the collective investment scheme fails to comply with this subregulation,
Collective Investment Management Company shall be liable to refund the
application money to the applicants."
VII.
Regulation 30 shall be
substituted with the following, namely,- "Offer
period “30.
No collective investment scheme shall be open for subscription for more than
fifteen days: Provided that
collective investment scheme may be kept open for subscription for a maximum of
another fifteen days subject to issuance of public notice by the Collective
Investment Management Company before the expiry of initial fifteen days."
VIII.
In regulation 31, i.
Sub-regulation (3) shall be
substituted with the following, namely,- "(3)
Any amount refundable under sub-regulation (2) or proviso to sub-regulation (6)
of regulation 24, shall be refunded within a period of five working days from
the date of closure of subscription list, by cheque or demand draft marked
"A/C Payee" through Registered A.D. or speed post, courier etc., or
payment channels such as RTGS, NEFT, IMPS, direct credit, etc. or any other
mode allowed by the Reserve Bank of India from time to time, to the
applicants." ii.
In sub-regulation (4), the
words "six weeks" shall be substituted with the words "five
working days".
IX.
In regulation 32, i.
the words "unit
certificates as soon as possible but not later than six weeks" shall be
substituted with the words "the units only in dematerialized form within a
period of five working days". ii.
the symbol ":"
shall be substituted with the symbol ".". iii.
the proviso shall be
omitted.
X.
In regulation 35, after
clause (d), the following clause shall be inserted, namely,- "(e)
not invest more than twenty five percent of the amount raised by Collective
Investment Management Company in projects owned directly or indirectly by
Collective Investment Management Company."
XI.
In Ninth Schedule, Part 1
shall be substituted with the following, namely,- "PART I -CEILING ON EXPENSES The expenses incurred
shall be subject to a ceiling as specified below: (1)
Initial Issue Expenses (a)
These may include: (b)
cost of offer documents and
related costs; (c)
marketing and selling
expenses including agents commission, if any; (d)
fees to Lead Managers, if
any, Registrars and collecting banks; (e)
initial rating and appraisal
fees. (f)
These expenses may be borne
by the collective investment scheme. (g)
These expenses shall not
exceed 2.00 percent of the funds raised under the collective investment scheme. (2)
Annual recurring expenses. (a)
Annual recurring expenses
consist of the following: i.
Management and Advisory
Fees; ii.
Registrar fees for transfer
of units sold or redeemed; iii.
Fees and expenses of
trustees; iv.
Audit fees; v.
Subsequent Rating and
Appraisal fees; and vi.
Listing fees. (b)
The annual recurring
expenses shall not exceed 2 percent of the funds raised under the collective
investment scheme. (c)
Incentive fees, No incentive
fee based on performance of the scheme shall be charged to the scheme in any
form or manner. (3)
Other Expenses, Other direct
costs, if any, which are incidental to the operation of the collective
investment scheme may be charged to scheme, as may be approved by trustee: Provided that
granular (item wise) list of direct costs covering at least eighty percent
expenses shall be disclosed in offer document and a quarterly disclosure of
actual expenses shall be made. (4)
All other expenses shall be
borne by the Collective Investment Management Company: Provided that
collective investment scheme related expenses including commission paid to
distributors, by whatever name it may be called and in whatever manner it may
be paid, shall necessarily be paid from the scheme only within the regulatory
limits and not from the books of the Collective Investment Management Company,
its associate, promoter(s), trustee or any other entity or through any other
route: Provided
further that Collective Investment Management Companies shall adopt full trail
model of commission in all schemes, without payment of any upfront commission
or upfronting of any trail commission, directly or indirectly, in cash or kind,
through sponsorships, or any other route."Securities And Exchange Board Of
India (Collective Investment Schemes) (Amendment) Regulations, 2022