Concessions For Mfs Overdue

The following are the major steps intended to be taken:

nA close-ended scheme (CES) can turn into an Open-ended scheme (OES) after a fixed period on terms and conditions explained in the prospectus or determined by majority of unitholders.

This is the best boost given. The CES faces many unsurmountable problems, the main one being the listing requirement. The UTI is the first one to take advantage from this facility by converting Mastergain-92 and Grandmaster into OES.

nThe requirement to list CES within six months from the scheme's closure is dropped if the plan provides continuous daily repurchase facility, even one that is restrictive.

 

Option is given to allow periodic repurchase and reissue to CES. CES can reissue units periodically and reissue the same without increasing the number of units issued initially. It is also allowed to operate as interval fund, that is, periodically open for sale and repurchase.

nOES can offer repurchase within a period of six months instead of immediately on allotment. This gives them a better opportunity to open at above par rates by covering their initial launch expenses which can amount to about six per cent.

Monthly income plans with predetermined periodic repurchase may also not be listed.

The amount collected was required to be refunded if a CES was not able to collect Rs 20 crore and the limit for OES was Rs 50 crore. These limits are now thankfully dropped. AMC can either retain the oversubscription or offer the green-shoe option (refund in the case of oversubscription beyond a specific level), or refund, at its own discretion.

All the fund managers were always tense on this count whenever a scheme was launched. Many of them used to go around with a begging bowl. Sometimes,