SPECIFIED
UNDERTAKING OF THE UNIT TRUST OF INDIA (MANAGEMENT OF SCHEMES, ASSETS,
INVESTMENT, TERM OF OFFICE, FEES, ALLOWANCES AND CONDITIONS OF APPOINTMENT OF
ADVISERS AND MISCELLANEOUS PROVISIONS) SCHEME, 2003
In exercise of the powers conferred by Sub-section (1) of
Section 20 read with Sub-section (2) of section 9 of
the Unit Trust of India (Transfer of Undertaking and Repeal)
Act, 2002 (58 of 2002), the Central Government hereby makes
the following Scheme, namely:
Scheme - 1.Short Title and Commencement. -
(1) This Scheme may be called the
Specified Undertaking of the Unit Trust of India (Management of schemes,
Assets, Investment, term of office, fees, allowances and conditions of
appointment of Advisers and Miscellaneous Provisions) Scheme, 2003.
(2) It shall come into force on
the date of its publication in the Official Gazette.
Scheme - 2. Definitions.-
In this Scheme, unless the context otherwise requires,
(a) "Act" means the
Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002;
(b) "Adviser" means a
person appointed as a member of the Board of Advisers
under Sub-section (1) of Section 9 of the Act;
(c) "Board of
Advisers" means a Board consisting of such members
appointed by the Central Government under Sub-section (1) of Section 9;
(d) "Scheme" means the
scheme made by the Central Government under Section 20 of the Act;
(e) Words and expressions used herein
and not defined in this Scheme but defined in the Act shall have
the meanings respectively assigned to them in the Act.
Scheme - 3. Management of the Affairs of the Specified Undertaking:
(1) The Administrator (including the
executives of the Specified Undertaking) shall transact the
management functions of the schemes mentioned in Schedule I of
the Act in accordance with the procedures laid down in Annex A to this Scheme.
(2) The investment/dis-investment
decisions in respect of Asset Reconstruction Fund, Children Welfare Fund,
Senior Citizen Welfare Fund, Rajlakshmi Women Welfare Fund and Investor
Protection Fund Terminated Schemes shall be taken by the Administrator
under the overall guidance of the Board of Advisers.
(3) If the Administrator is of the
opinion that the circumstances exist which render it necessary for him to
take immediate action in matters relating to sub rule (1) and (2)
above, where the interest of the specified undertaking may be prejudicially
affected if such action is deferred until after the next meeting of the Board
of Advisers, the Administrator may take such action, but in every such case,
he shall as soon as may be after the action is taken, make a written
report to the Board of Advisers and to the Central Government containing a
statement of the action taken and circumstances under which it was taken.
Scheme - 4. Qualifications, Terms of office. Disqualification, Vacation of office ofmembers of theBoard of Advisers:
(1) The Member shall be a person
of ability, integrity and standing who has adequate knowledge or experience
or shown capacity in dealing with the problems relating to economics, law,
commerce, banking, finance, industry, public affairs or administration or in
any other discipline which in the opinion of the Central
Government shall be useful to the Board of Advisers.
(2) Before appointing any member
of the Board of Advisers, the Central Government shall satisfy itself
that the person does not have any such financial or other interest as
is likely to affect prejudicially his functions as member.
(3) Every member shall hold
office for a period of one year or until further orders, whichever is
earlier, but shall be eligible for reappointment.
(4) Every Member of Board of
Advisers (and Administrator) shall before entering upon his office
make and subscribe to an oath of office and of secrecy in Form at
Annex B to this scheme before assuming the office.
(5) A person shall be
disqualified for being appointed as, and for being' an Adviser.
(a) if he has at any time been
adjudicated as insolvent; or
(b) if he has been found to be
unsound mind and stand so declared by a competent court; or
(c) if he has been convicted by a
criminal court of an offence which involves moral turpitude.
(6) If an Adviser is absent without
leave of the Board for more than three consecutive meetings thereof,
he shall be deemed to have vacated his office as such and
thereupon his office shall become vacant.
Scheme - 5. Resignation/Removal from Office:
The Administrator or any Adviser may by writing under his hand and
addressed to the Central Government resigns his office at any time:
Provided that the member shall, unless he is permitted by the
Central Government to relinquish office sooner, continue to hold office until
the expiry of one month from the date of receipt of such notice or until a
person duly appointed as a successor enters upon his office or until the
expiry of his term of office, whichever is the earliest.
Scheme - 6. Casual Vacancy:
A casual vacancy caused by the resignation or removal of any member
of the Board of Advisers under
para 5 or otherwise shall be filled by fresh appointment.
Scheme - 7.Defects in appointments not to invalidate acts etc.:
(1) No act or proceedings of
the Board of Advisers shall be invalid by reason only of the
existence of any vacancy among its members or any defect in the
constitution thereof; or
(2) Any defect in the appointment of
a person acting as a member of the Board of Advisers; or
(3) Any irregularity in the procedure
of the Board of Advisers not affecting the merits of the case.
Scheme - 8. Salary and Allowances:
Every member of a Board of Advisers shall.
(1) receive a fee of two thousand
rupees for each Board meeting which he attends;
(2) be reimbursed his own actual
travelling expenses, if any, and shall be paid halting allowance of two
hundred eighty rupees every day reckoned from the time of departure of the
Adviser from his headquarters or if the journey is made
from another station, from such station;
(3) An Adviser who is an officer of
the Central Government shall be paid travelling and halting allowances in
accordance with Government Notification No. S.O.43(E)
dated 15-1-2003.
Scheme - 9. Meetings of theBoard of Advisers:
(1) The Administrator shall be
the Chairperson of the meetings of the Board of Advisers
and shall convene and preside over the meetings of the Board of
Advisers which may be held ordinarily at his office or at
any other-place in India.
(2) The Board shall be free
to frame its own procedure for transaction of its business from time to time.
(3) Notwithstanding anything
contained in the procedure of transaction of business of meetings of
the Board of Advisers, on the notice given by minimum two Advisers of
the Board of Advisers, a meeting of the Board of
Advisers shall be convened.
(4) If the Central Government is of
the opinion that it is necessary to convene the meetings of the Board
of Advisers for the purpose of carrying out the provisions of the Act,
the Board of Advisers shall convene the meeting as such.
(5) Ordinarily, a notice of not less
than seven clear days shall be given for convening the meeting. In
exigencies, the meeting could be convened at a notice of not less than
twenty four hours.
(6) Three members, including the
Administrator, shall constitute a quorum. The Board shall take
decision based on opinion of majority.
(7) Any member who has a direct
or indirect pecuniary interest on any of the matter in the agenda of
the Board shall disclose and shall not take part in the
deliberation or decision with respect to that matter.
(8) The Administrator or any Adviser
authorised in his absence by the Central Government shall circulate
the proceedings of each meeting for information and confirmation of each
Adviser within two days of the meeting.
(9) The Board of
Advisers shall meet at least six times a year, and the gap between
the two meetings shall not be more than seventy five days.
Scheme - 10.Borrowing Power:
The Administrator may take all such acts or things as may be incidental
to or consequential upon the discharge of his functions under
Section 10 of the Act.
Scheme - 11. Interpretation:
If any question arises relating to the interpretation of any of the
provisions of this Scheme, the same shall be referred to the decision of
Central Government, [and if
any party aggrieved by the decision of the Central Government, such party may
prefer an appeal to any Court having jurisdiction over the matter for the
purposes of resolution of the same.]
Annex A to the
Scheme
[see section 3(1)]
Transactions shall be guided by the redemption requirements.
PRIMARY MARKET ( EQUITY) : Includes IPOs, Open offers,
private placement, rights, buyback offers (other than through market
operations), warrant conversions, etc.
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Primary Market
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Recommended by
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Vetting by
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Approving authority
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(a) Purchase of Equity Shares:
(IPOs,
preferential
allotment,
rights,
underwriting
etc).
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Fund Managers of the respective
scheme
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The Head
of
Respective
DFMs
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Committee consisting of
ED & Administrator : Upto Rs 40 crores.
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Advisory Board : All the
proposals above Rs. 40 crs.
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(b) Sale of Equity Shares:
[open offers, buybacks
(other than
through
secondary market) etc.]
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Fund Managers of the respective
scheme
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The Head
of
Respective
DFMs
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Committee consisting of
ED & Administrator : Upto Rs 40 crores
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Advisory Board : All the
proposals above 40 crores.
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For all primary market equity transactions, the
disbursement of funds/tendering of equity shares by Department of Fund
Accounts will be supported by scheme-wise recommendation of fund managers and
approval thereof as above. Approving authority would consider the
investment/divestment only if the same is recommended by the concerned fund
managers.
SECONDARY MARKET (EQUITY): Secondary market equity
transactions (excepting transactions under index funds) will be carried out by
the Dealing Room (Equity) of UTI AMC based upon requisition notes originated by
Fund Managers and approved as per the delegation of powers specified below.
Sections (A) and (B) list down the delegation of
power to fund managers for transactions to be undertaken by each fund. Section
(C) refers to the execution of transactions of the UTI-1 as a whole. The
limits for such executions have been set out in section (C) above.
(A) FOR ALL SCHEMES except INDEX
FUNDS:
Overall Limit at Fund Level
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Secondary Market Transaction (Equity)
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* Approving Authority
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Fund Manager@
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Head of the DFM
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Administrator
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Advisory Board
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Total value of transaction by a
single scheme in one day
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Rs 10 crores
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Rs 20 crores
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Rs 40crores
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All powers in
excess of the
delegated
authority
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OR
Not more than 5 %
of the fund size of
the respective
funds
Whichever is
lower
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OR
Not more than
7.5% of the
fund size of the
respective
funds
Whichever is lower
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OR
Not more
than 10% of
the fund size
of the
respective funds
Whichever is
lower
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(B) Company wise limit in a fund
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Secondary Market Transaction (Equity)
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* Approving Authority
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Fund Manager@
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Head of the DFM
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Administrator
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Advisory
Board
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(b) Total number
of shares/value
transacted by a
single scheme in
one day in one
company
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*Rs 5 crores
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Rs 10 crores
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Rs 20 crores
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All powers in
excess of the
delegated
authority
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OR
Not more than 2%
of fund for one
company
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OR
Not more than
5% of fund for
one company
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OR
Not more than 5% of fund for one
company
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OR
Not more than
0.5% of paid up
equity capital of
the said company,
Whichever is lower
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OR
Not more than
1% of paid up
equity capital
of the said
company Whichever is lower
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OR
Not more
than 1% of
paid up
equity capital
of the said
company, Whichever is lower
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To be signed by atleast two officers of the
respective DFMs of Grade B and above, of which atleast one is the
designated Fund Manager of the scheme.
(C) For calculation of transaction
value, fund size etc., the closing price of previous day is considered.
(D) Above-mentioned limits will also
include all the equity transactions done by a single scheme through
inter-scheme transfer on that day.
EXECUTION
IN SECONDARY MARKET
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Secondary
Market
Transaction
( Equity )
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* Approval for Execution
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GM
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Administrator
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Advisory board
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Total transaction
in terms of
number of shares
of a company in
a day by UTI on
consolidated basis
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GM (in-charge of Dealing-Secondary
market): 1%& above 1% upto 3% of the paid up equity
capital of the company
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CGM/ ED (in-charge of Dealing-
Secondary market) : above 3% & upto 5% of the paid up
equity capital of the company
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More than 5% of the paid up
equity capital of the company
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REPORTING
PRIMARY
MARKET TRANSACTIONS:
All the primary market equity
transactions should be reported to the CGM/ED (Dept of Dealing) and
Administrator on the same day by Dept of Dealing (Primary Markets).
Report on all primary market purchase of
equity shares and sale of equity shares will be placed to
Advisory Board meeting for information.
SECONDARY
MARKET TRANSACTIONS
(a) All the transactions in the
secondary market by a fund are reported to Head of DFM & CGM/ED
in-charge of the DFM on a daily basis.
(b) Department of Dealing (Secondary
market) prepares on daily basis a report on orders placed which are forwarded
to CGM/ED (Dealing) and Administrator for information.
(c) Summary of all secondary equity
market transactions and broker- wise business are placed for the information of
Advisory Board in the subsequent meeting.
CONTROL
AND CORRECTIVE ACTIONS
The above listed delegation of power are controlled
through the system driven mechanism whereby checks and balances are
established to ensure strict adherence to delegation of power.
If by any chance, there is a violation at any level
i.e. transacted amount exceeds the delegated authority, then it is immediately
reported to the authority of higher level (who has the delegation for such
transaction) along with explanation to seek ratification of the said violation.
AUTHORITY
TO RESTRICT THE DELEGATED POWER
If the situation warrants. Administrator may direct
in writing either a particular Fund or all the funds managed by a particular
fund manager/s, to seek the approval of the higher level irrespective of
the above delegation.
DELEGATION
OF POWER FOR INVESTMENTS OTHER THAN EQUITY (DEBT):
Currently, the investments in debt (all
instruments other than equity) takes place through Department of
Dealing-DOD Debt Section in case of secondary market transactions and through
Department of Dealing Primary Market Section in case of primary market
transactions. The respective sections will obtain the approvals of the
appropriate authority, by following the procedure mentioned below.
In the case of primary market debt instalments the
DOD sends the proposals received at their end to the Department of Fund
Management-DFM (Debt-I, Debt-II and US 64). The DOD, on getting the DFM's
interest on the proposal, sends the same to the Committee comprising of ED and
Administrator. The PMIC, in case a positive view is taken on the proposal, recommends
the proposal to the Administrator for approval.
In the case of secondary market debt instruments
the DOD sends the proposals received at their end to the Department of Fund
Management (Debt-I, Debt-II and US 64). The DOD, on getting the DFM's interest
on the proposal, sends the same to the Administrator for approval.
(A) The following delegation, as a
part of internal guidelines, is for debt investments like
G-Secs, Corporate debentures (including FCDs, NCDs, PCDs, OFCDs etc.),
securitised debt, preference shares etc. (all
investments other than equity).
2.
PRIMARY MARKET INVESTMENT (Debt - other than Govt. securities)
Includes IPOs, Private placements. Exercising Put
option. Subscription to Rights issue etc. (all
transactions other than secondary market transactions).
Purchases : The powers applicable will be per company per
day
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Company/ Instrument Rating
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Scrutiny
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Recommended by
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Approving authority
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AA- and above (or
any equivalent rating) and NBFCs
rated
only 'AAA'
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Primary
Mkt
Section by note *
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Fund
Manager
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Ed and Administrator :
On the recommendation of Fund
Manager, upto Rs. 40 crore for all schemes put together
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Advisory Board:
On recommendation of Fund Manager and
PMIC above Rs. 40 crore by EC/Board for all Schemes put together
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Company /Instrument Rating
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Delegation
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Purchase
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A+ and below (or any equivalent
ratings) and NBFCs rated below AAA
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Advisory Board:
On recommendation of the Fund Manager and
Committee consisting of ED and Administrator for all schemes put together
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Company/ Instrument Rating
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Delegation
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Sale
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All transactions like buyback of debt
prepayment etc. irrespective of rating
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Administrator : upto
Rs. 40 crs. Advisory Board: beyond
Rs. 40 crs. On recommendation of Fund Manager and Internal
committee.
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Put option on securities
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Administrator : upto
Rs. 40 crs. Advisory Board: beyond Rs. 40 crs. On
recommendation of Fund Manager and Internal committee
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Exposure Norms
It is also proposed that the exposure in a single
NBFC may be limited to a maximum of the Networth of the NBFC as per the latest
audited balance sheet, for all future investments (as against the earlier
cap of Rs. 100 crore per NBFC). Networth for this purpose may be
computed as:
Networth = Paid up Share Capital + Reserves
and Surplus (excluding Revaluation Reserves) - Miscellaneous Expenditure not
written off - Accumulated Losses, if any.
It is also clarified that investment in NBFCs excludes
investment in Housing Finance Companies (for which there are separate norms)
and Tier II Bonds issued by Banks.
3.
SECONDARY MARKET INVESTMENT (Debt-other than govt. securities):
Purchases : The powers applicable will be per company per
day.
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Company/Instrument rating
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Scrutiny
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Recommended
by
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Approving authority
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AA- and above (or any equivalent
ratings)** and NBFCs with credit rating only 'AAA'
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Office note by Secondary Mkt Section
(debt) (detailed in part B of the memorandum)
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Fund Manager
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Fund Manager:
Upto 2% of Assets under
Management of a scheme
Or Rs. 5 crore for a scheme
Whichever is lower.
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Committee consisting of Executive Director and
Administrator :
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On recommendation of Fund Manager,
Upto 5% of Assets under Management of a scheme
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Or Rs. 20 crore for a
scheme whichever is lower.
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Advisory Board:
On recommendation of Fund Manager
Above Rs. 20 crore for a scheme
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A + and below (or any equi. Ratings)
and NBFCs below rating of AAA
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Detailed note by Secondary
Mkt. Section (debt)****
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Fund Manager
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Advisory Board
On recommendation of Fund Manager
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Non-Investment Grade (other
instrument without rating)
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Detailed note by Secondary Mkt.
Section (debt)**** (detailed in part B of the memorandum)
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Fund Manager
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Advisory Board
On recommendation of Fund Manager
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Sales: The powers applicable will be per company per
day.
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Company/Instrument Rating
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Scrutiny
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Recommended by
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Approving authority
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AA-and above (or any equivalent ratings)**
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Office note by Secondary Mkt. Section
(debt) (detailed in part B of the memorandum)
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Fund Manager
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Fund Manager :
Upto 2% of Assets under
Management of a scheme
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Or Rs. 5 crore for a scheme
whichever is lower.
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Committee cosisting of Executive
Director and Administrator :
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On recommendation of Fund Manager,
Upto 5% of Assets under Management of a scheme
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Or Rs. 20 crore for a
scheme whichever is lower.
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Advisory Board:
On recommendation of Fund Manager
Above Rs.20 crore for a scheme
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A + and below (or any equi. Ratings)
and NBFCs securities of all ratings
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Detailed note by Secondary Mkt
Section (debt)****
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Fund Manager
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Fund Manager :
Upto 2% of Assets under
Management of a scheme
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Or Rs. 5 crore for a scheme
whichever is lower.
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Committee consisting of Executive
Director and Administrator :
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On recommendation of Fund Manager,
Upto 5% of Assets under Management of a scheme
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Or Rs. 20 crore for a
scheme whichever is lower.
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Advisory Board :
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Above Rs. 20 crore for a
scheme On recmeommendation of Fund Manager
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Amounts mentioned are in face value except in
case of discounted bonds where cost of acquisition shall be considered for
the purpose.
In case the proposal is for purchase of securities
of NBFC the same is put up to the Advisory Board for its approval.
In case the yields at which the recommendation is
made is lower/higher for purchases/sales than the yields mentioned for the
corresponding rating and modified duration in the matrix used for valuation, at
the time of taking decision, the same is approved by the next higher
authority as per the delegation.
The secondary market section does the financial
analysis, indicate default status, adherence to the financial norms as
prescribed for primary market Investments and regulatory requirements and
explicitly state their views on the company's financials.
Execution in Secondary Market:
(for UTI-1 as a whole)
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Secondary market transactions (other
than equity)
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AGM
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GM
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ED
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For UTI-1 as a whole per company
per day
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Rs. 10 crore
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Rs. 25 crore
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> Rs. 25 crore
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1.
GOVERNMENT
SECURITIES
For the investments in Central Government
Securities both through primary and secondary route ten times the amount limits
as mentioned under the secondary market investment (debt) shall be
applicable with % limits of Assets under Management remaining the same.
Central Government Securities per
day: Primary and Secondary Market: Purchase and Sales combined
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Approving authority
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Fund Manager :
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Upto 4% of Assets under
Management of a scheme
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Or Rs. 20 crore for a
scheme whichever is lower.
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Committee consisting of Executive
Director and Administrator:
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On recommendation of Fund Manager,
Upto 10% of Assets under Management of a scheme
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Or Rs. 100 crore for a
scheme whichever is lower.
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Advisory Board :
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On recommendation of Fund Manager
Above Rs. 100 crore for a scheme
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For the investments in State
Government Securities both through primary and secondary route five times the
amount limits as mentioned under the secondary market investment
(debt) shall be applicable with % limits of Assets under Management
remaining the same.
State Government Securities per day
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Approving authority
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Fund Manager :
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Upto 4% of Assets under
Management of a scheme
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Or Rs. 10 crorc for a
scheme whichever is lower.
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Committee consisting of Executive
Director and Administrator :
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On recommendation of Fund Manager,
Upto 10% of Assets under Management of a scheme
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Or Rs. 50 crore for a
scheme whichever is lower.
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Advisory Board:
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On recommendation of Fund Manager
Above Rs. 50 crore for a scheme
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The Fund Manager ensures that all the
investment decisions are based on each fund's liquidity, investment
objectives, internal guidelines and regulatory restrictions.
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Others
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The Inter Scheme Transfers of assets
are akin to a secondary market transfer of assets which are based on the
current valuations/prices. They do not lead to any fresh exposure for the
UTI-I. Hence, the delegation for Inter Scheme Transfers for companies rated
AA-and above and 'AAA' rated NBFCs would be the same as applicable for
secondary market transactions. The Inter Scheme Transfers of
NBFCs other than 'AAA' rated and papers rated A+ or below but which
are of investment grade are to be approved by Administrator.
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(B) DECISION MAKING
PROCESS/RECORDING OF INVESTMENT DECISIONS:
Details as per Chapter III of Manual of Investment
Policies, Guidelines and Risk Control Framework.
(C) REPORTING.
A report on the investments made is put up by the
primary market section/secondary market section to the Executive Directors and
Administrator on a daily basis for information. A summary of the same is also
be placed for the information of Advisory Board on a regular basis.
(D) NCONTROL AND CORRECTIVE
ACTIONS:
The above listed delegation of power are controlled
through a system driven mechanism (when introduced) whereby checks
and balances are established to ensure strict adherence to delegation of power.
If by any chance, there is a non-adherence at any
level i.e., the transacted amount exceeds the delegated authority, it is
immediately reported to the competent authority to seek ratification.
ANNEX B
DECLARATION OF FIDELITY AND
SECRECY
[See section 4(4)]
I do hereby declare that I will faithfully, truly
and to the best of my skill and ability execute and perform the duties required
of me as Administrator or Adviser of the Administrator of the
Specified Undertaking of Unit Trust of India (Specified Undertaking) and which
relate to the office or position held by me in the said Specified
Undertaking.
I further declare that I will not communicate or
allow to be communicated to any person not legally entitled thereto any
information relating to the affairs of the Specified Undertaking or to the
affairs of any person having any dealing with the said Specified Undertaking;
nor will I allow any such person to inspect or have access to any books or
documents belonging to or in the possession of the Specified Undertaking and
relating to the business of the said Specified Undertaking or the business of
any person having any dealing with the said Specified Undertaking.
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Signed before me:
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(Signature)
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