The Securities and Exchange Board of India (SEBI) on May 12, 2023, issued a notification regarding the Investment in units of Mutual Funds in the name of a minor through a guardian.
The following has been stated namely: -
• Reference is drawn to Circular no. SEBI/HO/IMD/DF3/CIR/P/2019/166 dated December 24, 2019, which states “Stewardship Code for all Mutual Funds and all categories of AIFs, in relation to their investment in listed equities”. The circular has prescribed the uniform process to be followed across Asset Management Companies (AMCs) in respect of investments made in the name of a minor through a guardian.
• The following has been modified namely: -
“Para 1(a) shall read as under: “Payment for investment by any mode shall be accepted from the bank account of the minor, parent or legal guardian of the minor, or from a joint account of the minor with parent or legal guardian. For existing folios, the AMCs shall insist upon a Change of Pay-out Bank mandate before redemption is processed”
ii. Irrespective of the source of payment for subscription, all redemption proceeds shall be credited only in the verified bank account of the minor, i.e. the account the minor may hold with the parent/legal guardian after completing all KYC formalities.
iii. All other provisions mentioned in the aforesaid circular shall remain unchanged.”
• All AMCs are advised to make the necessary changes to facilitate the changes in mutual fund transactions with effect from June 15, 2023.
[Notification No. SEBI/HO/IMD/POD-II/CIR/P/2023/0069]
