Sebi introduces investor charters for MFs, PMS and assigns new rights to investors

The Securities and Exchange Board of India (Sebi) released separate investor charters for mutual funds (MF), portfolio management services (PMS) providers, and alternative investment funds (AIFs) on Friday, to assign various rights and responsibilities for investors. MFs and PMS managers need to disclose the details of the investor charters and investor complaint data on their websites, including complaints made on Sebi’s SCORES complaint redressal system, while AIFs must disclose the same in the private placement memorandums of their schemes, reported Livemint.com.

Sebi in the last month introduced an investment charter to protect the investor’s hard-earned money. This charter will help investors make an informed decision regarding risks taken by, in the respective schemes to generate alpha.

A new charter was released on Friday with the aim to protect the interests of the mutual fund, AIF, and PMS investors. This new charter for mutual fund investors assures some rights like the right to receive redemption money in a timely manner, the right to be informed about a change in the fundamental attribute, the right to timely disclosure of daily net asset values(N.A.V), and portfolio and performance of every scheme including net asset under management(AUM), investment objectives and expense ratios.

Regarding the responsibilities of the investors, the charter included that they should read scheme-related documents very carefully, they should provide their updated KYC information, and not sign any blank cheque instrument or any sort of blank signed transaction instructions.

"For effective monitoring, AIFs shall maintain data on investor complaints ...as which shall be compiled latest within 7 days from the end of the quarter," Sebi said. Disclosures need to be made using the formats prescribed by the regulator.

The primary purpose of this move is to bring further transparency to the investor grievance redressal mechanism. These disclosure requirements will be there in addition to those already mandated by Sebi. The circulars will be effective from January 1, 2022, reported NDTV profit.