SEBI Shortens Dividend Payment Timelines to Mutual Fund Unit Holders

New Delhi:

The capital markets regulator, the Securities and Exchange Board of India (Sebi), today shortened the timelines for the payment of the redemption amount and dividend to unitholders by Asset Management Companies (AMCs).

In a circular, Sebi has reduced the timeline for dividend payment to seven business days from the current 15 days.

It said the record date would be two business days from the issuance of a public notice, where appropriate, for the purposes of dividend payment.

“Dividend payments to unitholders will be made within seven business days of the record date,” said Sebi.

It has further reduced the redemption payout timeline to three business days instead of the existing 10 business days.

“The transfer of redemption or redemption proceeds to unitholders will take place within three business days from the date of redemption or redemption,” said Sebi.

For plans investing at least 80 percent of total assets in such permitted foreign investments, the transfer of redemption or redemption proceeds to unitholders would occur within five business days of the date of redemption or redemption.

In consultation with Sebi, the Association of Mutual Funds in India (AMFI) industry association would publish a list of exceptional circumstances for schemes that fail to transfer the redemption or redemption proceeds to investors within the prescribed time, together with the applicable time frame for the transfer of redemption or redemption will go to unitholders in such exceptional circumstances. The list would be published within 30 days.

The regulator said interest for the period of delay in the transfer of redemption or redemption or dividend would be payable to unitholders at a rate of 15 per cent per annum, along with the proceeds from redemption or redemption or dividend, as the case may be.

Such interest would be borne by AMCs and details of such payments would be sent to Sebi as part of compliance testing reports.

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