Mfs Asked To Update Offer Papers In 2yrs

The Securities and Exchange Board o India (Sebi) has issued guidelines making updation of mutual fund offer documents every two years mandatory. It has also asked to issue a reference addendum, as the fund house introduces more and more investment plans in the same scheme.

The market regulator insists that such plans be displayed on the mutual fund's website within 21 days of filing of the offer documents, a top official said.

Speaking at a study circle meeting organised by the Canbank Mutual Fund, Sebi chief general manager P K Nagpal said the idea behind Sebi's proactive approach towards transparency and disclosure norms was to ensure that "investors can take well informed decisions".

The Sebi-mandated disclosure norms compare well with those prevailing in developed countries such as the UK, the US and Australia, Nagpal said, noting that "as a result of these measures, the MF industry is now well poised for rapid growth".

In its efforts to ensure investor protection, the capital market watchdog has now asked even distributors and agents to get a certificate from the Association of Mutual Funds of India before 2003, Nagpal said. He also added that though Sebi does not vet offer documents as such, it still insists on a due-diligence certificate from the mutual funds.

"Besides, trustees have to report to Sebi and see that there is no conflict of interests. Advertisements should project reality and should not mislead," he said, adding that Sebi will take strict punitive action against those funds which are found to violate the norms or hurt investors' interests.