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

A mutual fund scheme's trustees decide to change a fundamental attribute of an open-ended scheme. Which combination of requirements applies under SEBI regulations?

Unit holders must be informed in writing and by newspaper notice, and offered an exit option of at least 30 days at the prevailing NAV without exit load. Website notice alone, AMFI approval or custodian consent does not meet the requirement.

  1. AOnly a notice on the AMC website is needed, with no exit option
  2. BWritten communication to each unit holder and a newspaper notice, with unit holders given an exit option at the prevailing NAV without exit load for at least 30 daysCorrect
  3. CApproval of AMFI alone, with no exit option for investors
  4. DConsent of the custodian, with exit allowed only after one year

Explanation

For fundamental attribute changes, unit holders must be informed individually in writing and through a newspaper notice, and must get an exit window of at least 30 days at the prevailing NAV without exit load. Website notice or AMFI approval alone does not satisfy this.

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