Investment by the sponsor or asset management company in the scheme

Last updated: 13 June 2020

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The Securities and Exchange Board of India (SEBI) has issued a new circular requiring sponsors or asset management companies to invest a minimum of one percent of the amount raised in a new fund offer (NFO) or fifty lakh rupees, whichever is less. This investment must be made in the growth option of the scheme. If a growth option isn't available, the investment will be directed to the dividend reinvestment option, or the dividend option if neither of the other two are present. This regulation aims to protect investor interests and promote market development.

Securities and Exchange Board of India CIRCULAR SEBI/HO/IMD/DF4/CIR/P/2020/100 June 12, 2020 All Mutual Funds (MFs)/Asset Management Companies (AMCs)/Trustee Companies/Boards of Trustees of Mutual Funds/ Association of Mutual Funds in India (AMFI) Sir / Madam, Subject: Investment b

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FAQ :

Sponsors or asset management companies are required to invest a minimum of one percent of the amount raised in a new fund offer (NFO) or fifty lakh rupees, whichever is less.

The investment must be made in the growth option of the scheme. If the growth option is not available, it should be in the dividend reinvestment option. If neither is available, it will be in the dividend option.

This circular comes into effect immediately.

The circular is issued to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.