DIRECTOR_PRESENTATION_-_NEERAJ

Comprehensive Programme on Capital Markets


STRUCTURE OF THE PRESENTATION

• UNDERSTANDING THE FRAMEWORK

• PROFILE OF TRUST AND AMC DIRECTORS

• REGULATORY REQUIREMENTS TRUST/AMC

• KEY PERSONNEL RESPONSIBILITIES

• PERSONNEL/PROCESS OWNERSHIP

• REGULATORY REPORTING STRUCTURE

• QUICK COMPLIANCE WALKTHROUGH


Trust Company

Sponsors

CustodianMutual Fund(Schemes)

Savings

AMCInvestment Manager

R & T Agent

Stake Holders

Unit Holders (Investors)

Units & Returns

SEBIThe Regulator

Stake Holders

Investment Management Agreement

AMFI

MF Structure in India


Towards Integrity Driven Performance

•Compliance training an integral part of induction programme for each employee.

•Access to Corporate Governance Manual and Compliance Manual through intranet.

•Periodic updates to branches and individual employees on regulatory and compliance developments.

•High level of hand-holding of branches and hands on approach.

•Direct updates at Ops./Sales meets on key areas of Compliance(especially on gap bridging).

•High level regulatory interaction and trust building.

•Key driver in guiding future regulation through contribution in regulation formulation both directly with SEBI and through AMFI.

Pro-active Compliance Program Delivery


To assist the Boards of the AMC and the Trustee in ensuring preservation of Sponsor Group’s reputation and integrity by complying with all local laws, regulations and ethical standards applicable to the Asset Management/ Mutual fund business.

To add value to the operations of the AMC.

To implement the best practices in the interest of the customers of the Fund.

To enable the business to sustain and maintain its lead over competition and to emerge as Leading player in the industry.

COMPLIANCE OBJECTIVES


Towards Integrity Driven Performance

Compliance Monitoring is structured through a Risk based annual Compliance Plan approved by the Board and ACM.

•Risks are analysed for each Compliance component.

•Weightages are assigned on the basis of the probability and the impact(Reputational, Regulatory and Financial) and ARS is arrived.

•Based on ARS the intensity of compliance monitoring is then determined through compliance tests which are applied at defined frequencies.

•Assurance reporting to ACM and Board at defined intervals provide confirmation about robustness of the compliance framework.

Risk Based Compliance Approach


There are many constituencies involved in the structure and set up of a mutual fund:


Compliance Head – Facilitates Functional Heads achieve Compliance in their domain – Overall responsibility rests with Compliance but ownership is shared.

Ensuring that units are sold in harmony

with the applicable regulations. · Setting parameters for empanelling brokers, agents, banks and other third party distributors. · Monitoring selling practices of distributors.

· Ensuring that the literature and sales material being distributed by the sales force

conform to the Regulatory requirements.

All investments related matters: Complying with Regulatory/prudential limits/

Complying with investment restrictions · affiliate transactions.

· inter scheme transfers.· affiliate and non affiliate broking limits.

· allocation of trades.

Units creation and redemption.· pricing of securities as per the Regulations

NAV computation· adhering to Regulations on custody of Fund’s securities.

· delivery of customer service as per committed parameters. · making disclosure to unit holders/trustees

· Ensuring compliance with recurring expenses limits.· Documents for Regulatory filings.

Hiring of employees to conform to the regulatory requirements.The terms of employment, service conditions and compensation policies conform to local laws. Policies for deduction of provident fund, pension and profession tax from the salaries · Filing of statutory returns on various deductions\made from the salaries of employees.

Insulate the organisation from regulatory risksEnsure Compliance with all applicable regulationsObtain Regulatory ApprovalsHandle all Legal MattersFulfill mandate by Board

CIO –

Ops. –

Sales–

Ensuring that the advertisement material, conform to regulatory guidelines Ensuring that customer complaints are redressed quickly. Ensuring that product material is in line with the various terms and conditions of the schemes and conforms to Regulatory requirements

Mktg.–

HR -

Compliance,Legal,

Company Secretary –NEERAJ VERMA


SHAREHOLDERS

General PublicInvestors

Audit Committees

Board of Directors -Direction

External Auditors

Employees Senior Management - Executive Action and Supervision

Service Providers and Vendors

Inve

stm

ents

Retur

ns &

Servi

ce

Info requestsCorrect Info

Remuneration

Tasks

Consideration

Services

Flow of Corporate Governance


Credit

Selling

Operational

Investment

Business Environment

Regulatory Compliance

Exposure to forces in the externalenvironment that could significantly changethe fundamentals that drive the overallobjectives and strategy

Risks caused by changes in the compliance/regulatory environmentsfor financial services products or failure to understand or effectivelyapply and comply with compliance/regulatory standards, principles andpractices

Ineffective, inefficientor inadequate seniormanagement processes for the development andimplementation of business strategyin relation to thebusiness environment and the Group’scapabilities

Exposure arising from the possibility that customers or third parties are unable or unwilling to meet their financial obligations when due or that such exposuresare inappropriately managed

Risks arising from the sale of products, including mis-selling the terms andbenefits of those products and the impact of variationsfrom assumptionson profit

Risks arising from changes in the market value of assets, changes in the investment return of assets held or failure to match assets and liabilities or inappropriate treasury management

Risk of direct or indirect loss resultingfrom inadequate or failed internalprocesses, people and systems or from external events

Strategic


The Fund will be sponsored by Mahindra & Mahindra Financial Services Ltd As per the Regulations, the Sponsors/Settlers appoint a Trustee Co (Trust Limited) to supervise the activities of the Fund.

The Sponsors


Trustee for *Mahindra Mutual Fund.Trustee has overall responsibility to supervise and oversee the affairs of Fund and ensure that the Regulations are complied with. The Trustee is ultimately responsible to the unit holders.The Trustee Company is managed by Board of Directors.Trustee has several rights and responsibilities under Regulations.

*Proposed subject to SEBI Approval

Mahindra Trustee Co Private Limited


A trust under Indian Trusts Act.An umbrella Fund, with a provision to have several portfolios (Schemes).The Fund’s corpus is contributed by Sponsors-MMFSLThe Sponsors had set up the Fund by executing a Trust Deed. The Trust Deed contains provisions of SEBI Regulations.Each portfolio (Scheme) is a distinct entity.The Trustee for the Fund is Mahindra Trustee Company Private Co Limited, which is a Corporate Trustee.

*Mahindra Mutual Fund (Fund)


•Corporate entity managed by Board of Directors.•Entrusted with the responsibility of investment management and day to day operations of the Schemes of Mutual Fund. •Responsible for launch of Schemes, providing systems, marketing, personnel accounting and compliance requirements.•Responsible to Board of Trustees. Required to manage the Funds diligently and as per Regulations.

MAHINDRA ASSET MANAGEMENT COMPANY CO PVT LTD


AMC shall take all reasonable steps and exercise due diligence to ensure that the investment of funds pertaining to any scheme is not contrary to the Regulations.AMC shall be responsible for acts of commissions or omissions by its employees or any of its agents.

AMC’s Obligations


REGULATORY PRESCRIPTIONS ON WHO CAN ACT AS TRUSTEES.

(1) A mutual fund shall appoint trustees in accordance with these regulations.

(2) No person shall be eligible to be appointed as a trustee unless - (a) he is a person of ability, integrity and standing; and (b) has not been found guilty of moral turpitude; and (c) has not been convicted of any economic offence or violation of any securities laws; (d) has furnished particulars as specified in Form C.

(3) An asset management company or any of its officers or employees shall not be eligible to act as a trustee of any mutual fund.

(4) Two thirds of the trustees shall be independent persons and shall not be associated with the sponsors or be associated with them in any manner whatsoever.

(6) In case a company is appointed as a trustee then its directors can act as trustees of any other trust provide that the object of the trust is not in conflict with the object of the mutual fund.

Approval of the Board for appointment of trustee


BOARD OF TRUSTEES –Mahindra Trustee Co Private Limited

1) Mr. M.G.BHIDE -Chairman-Independent

2) Mr. R.K.Kulkarni Independent

3) Mr. Uday Y. Phadke Associate

4) Mr. Independent

3 OUT OF 4 DIRECTORS SHOULD BE INDEPENDENT DIRECTORS COMPLYING WITH THE REGULATORY REQUIREMENT UNDER SEBI REGULATIONS.


Rights and Obligations of the Trustee under the Trust Deed and the Regulations

Pursuant to the Deed of Trust constituting the Mutual Fund and in terms of the Regulation the rights and obligations of

the Trustee are as under:1. The Trustee shall have a right to obtain from the AMC such information as is considered

necessary by it.2. The Trustee shall ensure before the launch of any scheme that the Asset Management

Company has : i. systems in place for its back office, dealing room and accounting; ii. appointed all key personnel including fund manager(s) for the Scheme and

submitted to the Trustee their bio-data which shall contain the educational qualifications, past experience in the securities market within fifteen days of their appointment;

ii. appointed auditors to audit the accounts of the scheme; iv. appointed a compliance officer to comply with regulatory requirements and to

redress Investor grievances; v. appointed registrars and laid down parameters for their supervision; vi. prepared a compliance manual and designed internal control mechanisms

including internal audit systems and vii. Specified norms for empanelment of brokers and marketing agents.

3. The Trustee shall ensure that the AMC has been diligent in empanelling the brokers, in monitoring securities transactions with brokers and avoiding undue concentration of business with any broker.

4. The Trustee is required to ensure that the AMC has not given any undue or unfair advantage to any associate or dealt with any of the associates of the AMC in any manner detrimental to the interests of the Unitholders.

5. The Trustee is required to ensure that the transactions entered into by the AMC are in accordance with the Regulations and the provisions of the Scheme.



6. The Trustee is required to ensure that the AMC has been managing the Scheme independently of other activities and has taken adequate steps to ensure that the interest of Investors under the Scheme are not compromised with those of any other Scheme or of other activities of the AMC.

7. The Trustee is required to ensure that all the activities of the AMC are in accordance with the provisions of the Regulations and shall exercise general and specific due diligence as required under the Regulations.

8. Where the Trustee has reason to believe that the conduct of the business of the Fund is not in accordance with these Regulations and the provisions of the Scheme launched there under, it is required to take such remedial steps as are necessary by it and to immediately inform SEBI of the violation and the action taken by it.

9. Each Director of the Trustee is required to file with the Trust the details of his securities transactions on a quarterly basis.

10. The Trustee is accountable for and is required to be the custodian of the Fund’s property of the respective of the Scheme and to hold the same in trust for the benefit of the Unitholders in accordance with the Regulations and the provisions of the Trust Deed.

11. The Trustee is required to take steps to ensure that the transactions of the Mutual Fund are in accordance with the provisions of the Trust Deed.

12. The Trustee is responsible for the calculation of any income due to be paid to the Mutual Fund and also of any income received in the Mutual Fund for the holders of the units of any Plan of the Scheme in accordance the Regulations and the Trust Deed.

13. The Trustee is required to obtain the consent of the Unitholders of the Scheme : When the Trustee is required to do so by SEBI in the interest of the Unitholders; or a. Upon a requisition made by three-fourths of the Unitholders of the Scheme; or b. If a majority of the Trustees decide to wind up the Scheme or prematurely redeem the Units




14. The Trustee shall ensure that no change in the fundamental attributes of the Scheme or the trust or fee and expenses payable or any other change which would modify the Plan and affects the interests of unit holders, shall be carried out unless: (i) a written communication about the proposed change is sent to each

15. The Trustee is required to ensure that there is no conflict of interest between the manner of deployment of its net worth by the AMC and the interest of the Unitholders.

20. The Trustee is required to periodically review the Investor complaints received and the redressal of the same by the AMC.

21. The Trustee is required to abide by the Code of Conduct as specified in the Fifth Schedule of the Regulations.

22.. The Trustee has to furnish to SEBI on a half-yearly basis:- (a) a report on the activities of the Fund covering the details as prescribed by SEBI; (b) a certificate stating that the Trustees have satisfied themselves that there have been

no instances of self dealing or front running by any of the Trustee, directors and key personnel of the AMC;

(c) a certificate to the effect that the AMC has been managing the schemes independently of any other activities and in case any activities of the nature referred to in sub Regulation (2) of Regulation 24 of the Regulations have been undertaken, the AMC has taken adequate steps to ensure that the interest of the Unitholders is protected

23.. The independent Directors of the Trustee are required to give their comments on the report received from the AMC regarding the investments by the Mutual Fund in the securities of the group companies of the sponsors.

24. No amendments to the Trust Deed shall be carried out without the prior approval of SEBI and Unitholders approval/ consent will be obtained where it affects the interests of Unitholders as per the procedure / provisions laid down in the Regulations.

25. The Trustees shall exercise general and specific due diligence required under the Regulations.26. Trustee shall maintain high standards of integrity and fairness in all their dealings and in the

conduct of their business.



27.Trustee shall render at all times high standards of service, exercise due diligence, ensure proper care and exercise independent professional judgement.

28. The independent directors of the Trustee shall pay specific attention to the following as may be applicable, namely :i. The Investment Management Agreement and the compensation paid under the agreement.ii. Service contracts with affiliates – whether the asset management company has charged higher fees than outside contractors for the same services.iii. Selection of the asset management company’s independent directorsiv. Securities transactions involving affiliates to the extent such transaction are permitted.v. Selecting and nominating individuals to fill independent directors vacancies.vi. Code of ethics must be designed to prevent fraudulent, deceptive or manipulative practices by insiders in connection with personal securities transactions.vii. The reasonableness of fees paid to sponsors, asset management company and any others for services provided.viii. Principal underwriting contracts and renewalsix. Any service contracts with the associates of the asset management company.

29. Notwithstanding anything contained in sub-regulations (1) to (25) of regulation 18 of the Regulations, the Trustees shall not be held liable for acts done in good faith if they have exercised adequate due diligence honestly.

30. The Regulations provide that the meetings of the Trustees shall be held at least once in every TWO months and at least SIX such meetings will be held every year. Further, as per the Regulations, for the purposes of constituting the quorum for the meetings of the Trustees, at least one Independent Trustee or Director should be present during such meetings.


REGULATORY PROVISIONS APPLICABLE TO AMC

APPROVAL FOR AMC IS GIVEN ONLY ON FULFILLING THE FOLLOWING CRITERIA

a) The directors of the asset management company are persons having adequate professional experience in finance and financial services related field and not found guilty of moral turpitude or convicted of any economic offence or violation of any securities laws;

(b) The key personal of the asset management company have not been found guilty of moral turpitude or convicted of economic offence or violation of securities laws13 [or worked]14 for any asset management company or mutual fund or any intermediary [during the period when its]15 registration has been suspended or cancelled at any time by the Board;

(c) The board of directors of such asset management company has at least fifty percent directors, who are not associate of, or associated in any manner with, the sponsor or any of its subsidiaries or the trustees;

(d) The Chairman of the asset management company is not a trustee of any mutual fund;

(e) The asset management company has a networth of not less than rupees ten crores:



Rights and Obligations of the Directors of the AMC under the Regulations1. The duties and responsibilities of the AMC shall be governed by the Regulations and the Investment Management Agreement. The AMC,

in the course of managing the affairs of the Mutual Fund, has the power, inter-alia:(a) to invest in, acquire, hold, manage or dispose of all or any securities and to deal with, engage in and carry out all other functions and to

transact all business pertaining to the Fund; (b) to keep the moneys belonging to the Trust with scheduled banks and Custodians as it may deem fit;(c) to issue, sell and purchase Units under any Scheme;(d) to repurchase the Units that are offered for repurchase and hold, reissue or cancel them; (e) to formulate strategies, lay down policies for deployment of funds under various Schemes and set limits collectively or separately for

privately placed debentures, unquoted debt instruments, securitised debts and other forms of variable securities which are to form part of the investments of the Trust Funds;

(f) to arrange for investments, deposits or other deployment as well as disinvestment or refund out of the Trust Funds as per the set strategies and policies;

(g) to make and give receipts, releases and other discharges for moneys payable to the Trust and for the claims and demands of the Trust;(h) to get the Units under any scheme listed on any one or more stock exchanges in India or abroad; (i) to open one or more bank accounts for the purposes of the Fund, to deposit and withdraw money and fully operate the same;(j) to pay for all costs, charges and expenses, incidental to the administration of the Trust and the management and maintenance of the

Trust property, Custodian and/or any other entities entitled for the benefit of the Fund, audit fee, management fee and other fees;(k) to furnish compliance reports to the Trustees as prescribed by SEBI.(l) to provide or cause to provide information to SEBI and the Unitholders as may be specified by SEBI and(m) to generally do all acts, deeds, matters and things which are necessary for any object, purpose or in relation to the Mutual Fund in any

manner or in relation to any scheme of the Mutual Fund.


Rights and Obligations of the Directors of the AMC under the Regulations

The Asset Management Company shall maintain high standards of integrity and fairness in all their dealings and in the conduct of their business.

The Asset Management Company shall render at all times high standards of service, exercise due diligence, ensure proper care and exercise independent professional judgement.

The independent directors of the Asset Management Company shall pay specific attention to the following as may be applicable, namely :i. The Investment Management Agreement and the compensation paid under the agreement.ii. Service contracts with affiliates – whether the company has charged higher fees than outside contractors for the same services.iii. Securities transactions involving affiliates to the extent such transaction are permitted.iv. Code of ethics must be designed to prevent fraudulent, deceptive or manipulative practices by insiders in connection with personal securities transactions.v. The reasonableness of fees paid to sponsors, asset management company and any others for services provided.vi. Principal underwriting contracts and renewalsvii. Any service contracts with the associates of the company.In terms of the Investment Management Agreement and the Regulations, the AMC is entitled to an Investment management fee at 1.25% per annum of the average net assets for a corpus up to Rs.100 crores and at 1.00% per annum for the corpus amount in excess of Rs.100 crores.


Sr no

Designation of function head

Regulation, rules, codes, practices and undertakings.

1. Investment All investments related matters:Regulatory/prudential limits/Investment restrictions in respect of on Fund’s investments. Affiliate transactions.· Inter scheme transfers.· Affiliate and non affiliate broking limits.· Allocation of trades.

KEY PERSONNEL


KEY PERSONNEL2. Operations – Units creation and redemption.

pricing of securities as per the 3. Regulations and offer documents of the schemes, NAV computation and compliance withthe accounting policies laid down by the Regulations, offer documents and the Trustees.· adhering to Regulations on custody of Fund’s securities.· delivery of customer service as per the Regulations and the parameters set in the offer documents of the schemes. · making disclosure to unit holders/trustees in regard to affiliate transactions, and accounting information relating to the funds.· Ensuring that the recurring expenses of the schemes are with in regulatory limits.· Regulatory filings.


KEY PERSONNEL

Sales and Distribution Retail

· Compliance with the Regulations in respect of all matters relating to the manner and information disclosure to the investors in connection with the sales of units of the funds.

· Setting parameters for empanelling brokers, agents, banks and other third party distributors.

· Monitoring the selling practices of distributors.

· Ensuring that the literature and sales material being distributed by the sales force conform to the Regulatory requirements.


KEY PERSONNEL

4. Marketing. Ensuring that the advertisement material, product literature, brochures etc conform to the advertisement guidelines issued under the Regulations.

· The customer complaints are redressed quickly.

· The material released to the Press for publication is in line with the various terms and conditions of the schemes and conforms to Regulatory requirements.


KEY PERSONNEL

5. Human Resources

Policies for hiring of employees conform to the regulatory requirements.

The terms of employment, service conditions and compensation policies conform to local laws.

· Policies for deduction of provident fund, pension and profession tax from the salaries of employees, remittance of the same to the appropriate authorities.

Registration under Shops and Establishments Act. · Filing of statutory returns on various deductions made from the salaries of employees.


KEY PERSONNEL6. Head of

Compliance / Compliance officer and Company Secretary.

Ensuring that the business of Mutual Fund and AMC is conducted as per the Regulations, professional and ethical standards as are expected in mutual fund industry and the standards set by the Sponsors/ Shareholders/Boards of Management of AMC and Trust Company. · Monitoring compliance environment and overseeing the compliance with Regulations, internal guidelines and standards by the departments and staff of AMC in respect of various operations and business activities of AMC/Fund. · Ensuring that the interests of investors of the Fund are always protected and there is no conflict of interest between the activities of AMC.


COMPLIANCE OWNERSHIP CONTD.

Compliance with the provisions of Companies Act in regard to:

•Drawing up and submission of annual accounts of the Company to its shareholders.

•Convening and holding of Board/Annual/Extra ordinary General meetings.

•Drafting of minutes.

•All matters relating to appointment and election of directors, auditors Filing of statutory returns and final accounts.

•Monitoring personal trades of employees and Insider Trading Regulations.

•Comprehensive review of AMC and Trustee obligations.


Compliance environment: Existing regulatory environment:

Nature of business activities Name of the Regulator

Mutual fund business and Portfolio Management Activities

Securities and Exchange Board of India.

Public Limited Companies and all matters relating to Companies Act, 1956.

Registrar of Companies, Department of Company Affairs, Government of India.

Revenue and Income Tax. Central Board of Direct Taxes, Commissioner of Income Tax, Mumbai.

Human Resources Provident Fund Commissioner (for provident fund deductions/remittances), respective Municipal Corporations( for deduction and remittance of profession tax) where the sales offices and Corporate office are located.

Foreign Exchange and all related matters.

Reserve Bank of India.

Customer complaints Consumer forums of respective areas.


SEBI is the prime Regulator.

Securities and Exchange Board of India (Mutual Funds) Regulations, 1996

govern Fund operations.

Regulations are comprehensive and encompass all critical areas.

Aims at protecting the interests of investors and promoting development of

Fund industry.

Companies Act, Income-tax Act, Foreign Exchange Management Act are

some of the other legislations.

Regulatory Environment


Compliance Objectives

Mission Statement for Compliance Function “The Compliance Function will strive to ensure that the customers

of the Fund are treated fairly and with professional skill. The Compliance Function is committed to add value to the operations of the AMC and implement the best practices in the interest of the customers of the Fund”.


Ownership and understanding of Compliance

Business Commitment to compliance and principle of investor protection

Mutual Fund operations in India are governed by the Securities and Exchange Board of India (Mutual funds) Regulations 1996, as amended from time to time, the applicable guidelines issued by SEBI and Reserve Bank of India. The AMC has the primary responsibility to ensure that the regulations are complied with in letter and spirit and that highest professional and ethical standards are maintained in carrying out the AMC’s business. The Trustees of the Mutual Fund, in discharge of their fiduciary responsibility, shall have to ensure that the various activities of the AMC are in the best interests of the unit holders or the customers of the Fund and that the operations of the AMC are in conformity with the regulatory provisions, norms and guidelines (Regulations).

Compliance risk arises if the Regulations are not complied with either partially or fully and are breached in spirit. This will lead to impairment of the reputation and integrity of Peerless Group Non compliance with the Regulations will also result in regulatory strictures, fines and penalties on AMC and in extreme cases of regulatory breaches suspension of the license of the AMC to carry on the asset management business. The Regulations make the AMC liable to make good any loss that a unit holder may suffer due to the failure of AMC to comply with Regulations, lack of professional skill and integrity. The Regulations further make it clear that the employees of the AMC are responsible for omissions and commissions.


Ownership for setting and developing compliance standards.

The Function Head or Chief Officer of each function in coordination with the Compliance Head is primarily responsible for upholding the compliance culture of the AMC, carry out the day to day activities according to the Regulations, standards and internal guidelines set by the Board of the Company. Each functional head is responsible, inter alia, to proactively develop and devise compliance processes and institute suitable mechanism for monitoring that such compliance processes are being adopted and followed by the staff of the functional unit.

It is also the responsibility of Head of each functional Unit to keep himself/herself abreast of the on going changes in the compliance environment, the Regulations that impact his/her functional area and accordingly revise the existing processes and guidelines for adoption by the department staff. Needless to state, such initiatives, where necessary will be carried out with the assistance of Compliance Head.


To sum up, Consistent with the Compliance principles:

• · Ultimate and collective responsibility for compliance rests with the C. E. O. and the Board of AMC.

•· The Head of Compliance function in overseeing/reviewing the Compliance frame work and procedures and assisting the Managing Director and Corporate Boards of AMC and Trust Company.

•· The Heads of the Department at Corporate Office for their respective functions/activities/operations at Corporate/ Zonal/ Branch/Sales Offices.

•· The Zonal Managers/Branch in charges for all the functions/ activities carried out in their respective offices/locations.

Further, the Heads of the Departments (HODs) at Corporate Office will have responsibility for their respective functions both at the Corporate office and the Zonal/Branch offices. HODs shall ensure that in these offices all applicable Regulations relating to their function are complied with. HODs, for this purpose, in co ordination with the Zonal/Sales offices, where necessary, will furnish to the Compliance function information/reports and confirmations as may be required by the Compliance function from time to time.

The Zonal/Branch Managers will primarily be responsible and accountable for ensuring compliance with the Regulations in their respective jurisdictions. They will also assist the HODs by furnishing the data/information as required by the HODs.


JUST A FLAVOUR OF WHAT REGULATION PRESCRIBES

SAMPLE - INVESTMENT RESTRICTIONS ON MUTUAL FUNDS

A mutual fund scheme shall not invest more than 15% of its NAV in debt instruments issued by a single issuer which are rated not below investment grade by a credit rating agency authorised to carry out such activity under the Act. Such investment limit may be extended to 20% of the NAV of the scheme with the prior approval of the Board of Trustees and the Board of asset management company.

Provided that such limit shall not be applicable for investments in government securities and money market instruments.

[Provided further that investment within such limit can be made in mortgaged backed securitised debt which are rated not below investment grade by a credit rating agency registered with the Board.]72


1A. A mutual fund scheme shall not invest more than 10% of its NAV in unrated debt instruments issued by a single issuer and the total investment in such instruments shall not exceed 25% of the NAV of the scheme. All such investments shall be made with the prior approval of the Board of Trustees and the Board of asset management company]73. 2. No mutual fund under all its schemes should own more than ten per cent of any company's paid up capital carrying voting rights.

3. Transfers of investments from one scheme to another scheme in the same mutual fund shall be allowed only if, - a. such transfers are done at the prevailing market price for quoted instruments on spot basis. [Explanation - "spot basis" shall have same meaning as specified by stock exchange for spot transactions.]74 (b) the securities so transferred shall be in conformity with the investment objective of the scheme to which such transfer has been made.


4. A scheme may invest in another scheme under the same asset management company or any other mutual fund without charging any fees, provided that aggregate interscheme investment made by all schemes under the same management or in schemes under the management of any other asset management company shall not exceed 5% of the net asset value of the mutual fund.

5. Every mutual fund shall buy and sell securities on the basis of deliveries and shall in all cases of purchases, take delivery of relative securities and in all cases of sale, deliver the securities and shall in no case put itself in a position whereby it has to make short sale or carry forward transaction or engage in badla finance. [Provided that mutual funds shall enter into derivatives transactions in a recognised stock exchange for the purpose of hedging and portfolio balancing, in accordance with the guidelines issued by the Board.]75


6. Every mutual fund shall, get the securities purchased or transferred in the name of the mutual fund on account of the concerned scheme, wherever investments are intended to be of long term nature.

7. No mutual fund [scheme]76 shall make any investment in;

a) any unlisted security of an associate or group company of the sponsor; or

b) any security issued by way of private placement by an associate

or group company of the sponsor; or

c) the listed securities of group companies of the sponsor which is in

excess of 25% of the net assets [***]77 }78


[8. No mutual fund scheme shall invest more than 10 per cent of its NAV in the equity shares or equity related instruments of any company.

Provided that, the limit of 10 per cent shall not be applicable for investments [in case of]79 index fund or sector or industry specific scheme.

9.[ A mutual fund scheme shall not invest more than 5% of its NAV in the unlisted equity shares or equity related instruments in case of open ended scheme and 10% of its NAV in case of close ended scheme.]80


Reporting Requirements

To the Regulator– SEBI, Reserve Bank of India

To the Sponsor– Mahindra & Mahindra Financial Services Company Limited

– Mahindra Trustee Co Pvt LtdTo the Investors/Existing Unit-holders


Compliance requirements to Unit-holders

NAV related compliances– Computation– Publication as specified in the offer document (in newspaper)– Display on Notice Board– Display on Web-site (AMFI and AMC)– On IVR

Dispatch of Redemption Warrants within 10 days of receipt of redemption request.Delay and result in penal interest @ 15% p.a.Dispatch of Dividend Warrant within 30 days of the date of declaration.


Compliance requirements to Unit-holders

Providing Account Statements.Providing disclosures in the Offer Documents for taking investment decisions.


Other Disclosures

Scheme Portfolio : Half-yearly - within 30 days of the end of half yearPublication of Half-yearly unaudited Results - within one month of closureAnnual Report - By 30 Sept.In case of change in fundamental attributes of the Scheme - newspaper ad, written communication to each unit-holder and exit option without exit load.


Compliance Reporting to SEBI

Quarterly Compliance Test ReportQuarterly Net Asset and Portfolio MovementHalf-yearly Compliance Report by TrusteesAdvertisement within 7 days of publicationMonthly Cumulative Mobilisation ReportAnnual Statistical ReportNew Schemes Report


Compliance Reporting to Trustee

Quarterly Report on MF operationsQuarterly Compliance ReportHalf-yearly Compliance Report to TrusteesBi-Monthly Compliance CertificateAssociate Transactions ReportReport on Unit-holders holding more than 5% NAV per schemeSecurities Transactions of Key personnel
