The Hindu Business Line : New reader-friendly MF documents from June 1

Mumbai, May 23 Market regulator SEBI has simplified the offer document and key information memorandum (KIM) to be filed by mutual funds to make them reader friendly.

The measures are aimed at reducing the bulkiness of the offer document (OD). Secondly, for existing schemes, it will only be updation of material facts by the asset management companies. The revised format for the OD and KIM will be effective from June 1.

To reduce the bulkiness, the OD has been split into two parts — Statement of Additional Information (SAI) and Scheme Information Document (SID).

SAI would now be taken away from the offer document and be available separately. It will be common for all schemes from one mutual fund, and will be filed with SEBI as a one-time filing.

Information parts

SAI contains information about the mutual fund, its promoters, sponsors, trustees, and the asset management company, among others. It is a kind of permanent document about the fund, said an expert on the subject.

Investors in any other scheme of a fund house may not require information contained in SAI. SAI has to be updated within three months from the end of the financial year.

SID, which will contain complete information about the scheme in question, will be valid for six months from the date of issuance of the final observation by SEBI.

“If the AMC intends to launch the scheme at a date later than six months, a fresh SID along with filing fees has to be filed with SEBI,” said the regulator.

For the schemes launched in the first half of the financial year, SID will have to be updated within three months from the end of the financial year. For those schemes launched in the second half, it shall be updated within 3 months of the end of the subsequent financial year.

Besides SAI and SID, the key information document containing data about schemes, such as asset allocation pattern, load structure, and tax treatment, is to be now provided in an abridged version.

From June 1

“All ODs of mutual fund schemes filed with SEBI after June 1 shall be prepared in the aforesaid format. Accordingly, the revised format of SID, SAI and KIM shall be applicable for draft ODs filed with SEBI from June 1,” said a SEBI circular.

“The existing schemes (including those already filed and awaiting launch) have to adopt SID and KIM format as soon as possible but not later than 12 months.”

“The OD of any scheme already filed with SEBI has to be recast in the format of SID and SAI after receiving final observations from SEBI.”