The Securities and Exchange Board of India (Sebi) on Wednesday restored the six-month validity period of the observation letter given by the markets regulator to mutual fund houses for launching new fund offers (NFOs).
SEBI’s opinion is necessary for any company or fund house to launch a public issue initial public offer (IPO) or NFO.
In the light of market turmoil due to Covid-19 last year, SEBI in March 2020 reduced the validity period of observation letter given for launching NFOs from six months to one year.
The regulator in a circular on Wednesday said, “However, for all schemes (NFOs) where SEBI has already issued the observation letter and the NFO is yet to be launched, the schemes shall be within one year from the date of SEBI’s observation letter,” the regulator said in a circular on Wednesday. Will be started inside.”
The circular will come into force with immediate effect.
This circular is issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act 1992 read with the provision of Regulation 77 of the SEBI (Mutual Funds) Regulations, 1996 to protect the interests of investors. . To promote and regulate the development of securities market and in securities.
An NFO is somewhat like an initial public offering (IPO) by an asset management company. Under this, an AMC issues new fund units for investment based on a specific subject, which can be large-cap, mid-cap, international equities or even bonds. At the NFO level, a fund house does not even build a portfolio of stocks or other instruments as a fund house only collects money at this point.
In order to reduce the compliance burden on market participants, SEBI had last year provided several relaxations to mutual fund houses including extension in the deadline for submission of financial results.
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