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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Legal and Regulatory Framework

A mutual fund scheme has a net asset base of Rs 500 crore. Under SEBI rules, the AMC receives advance approval for a change in a fundamental attribute of the scheme. Which of the following must be provided to the unitholders before the change is implemented?

Before a fundamental attribute change takes effect, unitholders must be informed in writing and be offered an exit option of at least 30 days at the prevailing NAV without any exit load. Trustee approval alone is not enough, and a website notice does not satisfy the requirement.

  1. AOnly a notice on the AMC website, with no exit option
  2. BAn exit option at the prevailing NAV without any exit load, for at least 30 days, along with a written communication of the changeCorrect
  3. CAn exit option at the NAV with a 1% exit load for 15 days
  4. DNo communication is required if the trustees have approved the change

Explanation

For a fundamental attribute change, unitholders must be informed individually by written communication and a newspaper notice, and given an exit option of at least 30 days at the prevailing NAV without exit load. The other options give too little protection or impose a load.

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