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

A mutual fund scheme's AMC wishes to change the fundamental attributes of an open-ended scheme. Which of the following must be done before the change is implemented?

The AMC must communicate the change in writing to each unit holder and give them an option to exit at the prevailing NAV without any exit load, following SEBI's prescribed process. Informing AMFI, distributors or merely a website notice is not enough.

  1. AOnly inform AMFI by email
  2. BObtain consent of the majority of unit holders by written communication, and give an exit option at prevailing NAV without exit loadCorrect
  3. COnly publish a notice on the AMC website
  4. DSeek approval of the distributors of the scheme

Explanation

A change in fundamental attributes requires SEBI-prescribed process: written communication to each unit holder with an option to exit at prevailing NAV without exit load, along with the required notice period and disclosure. Informing AMFI or distributors, or a website notice alone, is inadequate.

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