Market regulator Sebi on Monday extended the deadline for submitting public comments until February 15 on a proposal to strengthen the regulatory framework for undertakings for collective investment (UCITS).
The regulator had placed a consultation paper for the review of the Sebi (collective investment schemes) rules on its website on January 7 for comment by January 31.
Now, it has decided to extend the deadline for submitting comments until February 15, 2022, the Securities and Exchange Board of India (Sebi) said in a notice.
In its consultation paper, Sebi proposed that each UCI should have a minimum subscription amount of Rs 20 crore and that each UCI should have a minimum of 20 investors and that no investor should hold more than 25% of assets under management (AUM) of such a scheme.
Currently, mutual fund rules do not impose the minimum number of investors, the maximum holding of a single investor and the minimum subscription amount in a mutual fund.
The CIS is a common investment vehicle in a closed-end investment space and the shares of the schemes must be listed on a stock exchange.
In addition, the regulator has suggested that the collective investment management company (CIMC) or its promoters meet certain criteria with respect to track record and net worth.
In addition, the market watchdog proposed capping cross-shareholding in CIMC at 10% to avoid conflicts of interest and recommended that CIS not be open for subscription for more than 15 days.
The structure of the CIS is two-tiered. There are two entities involved in the process — CIMC and Trustees. CIMC is created to float and manage a SIC and the trustee is appointed custodian of funds and assets.
According to Sebi, with no minimum investment limit by the investor, retail investors are the primary target investor base for CIS.
The CIS regulation, notified in 1999, has not been revised since then.
“With a view to removing any regulatory arbitrage between various pooled investment vehicles available to retail investors, it is important that the regulatory requirement for UCITS as a pooled investment vehicle be aligned or matched with those of mutual funds,” Sebi said. .
The proposals are intended to strengthen the regulatory framework for collective investment schemes as well as to enable CIMC to effectively discharge its responsibilities to scheme investors.
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