**Summary:**
This circular, issued by the Securities and Exchange Board of India (SEBI) on April 6, 2021 (SEBIHOIMDIMD1 DOF2PCIR20210548), modifies a previous circular (SEBIHOIMDDF2CIRP202117 dated February 2, 2021) regarding the contribution of Asset Management Companies (AMCs) towards the share capital of a Limited Purpose Clearing Corporation (LPCC).
The key change pertains to the financial year used for calculating the Average Assets Under Management (AUM) upon which AMC contributions are based. The original circular stipulated FY 2019-20. This amendment changes the reference period to Financial Year (FY) 2020-21. The AUM calculation continues to include open-ended debt-oriented mutual fund schemes, excluding overnight, gilt fund, and gilt fund with 10-year constant duration, but including conservative hybrid schemes.
All other terms and conditions outlined in the February 2, 2021 circular remain unchanged.
This circular is issued under the authority granted by Section 11(1) of the Securities and Exchange Board of India Act, 1992, and regulation 77 of SEBI Mutual Funds Regulations, 1996, to protect investor interests, promote market development, and regulate the securities market.
For further information, contact Hruda Ranjan Sahoo, Deputy General Manager, at 022-26449586 or hrsahoo@sebi.gov.in.
Key Entities Referenced
Securities and Exchange Board of India: Regulatory body for securities market in India; issuer of the circular.
Asset Management Companies (AMCs): Entities managing the investments of mutual funds.
Mutual Funds: Investment vehicles that pool money from multiple investors to purchase securities.
Association of Mutual Funds in India (AMFI): An association of all AMCs in India.
Limited Purpose Clearing Corporation (LPCC): A special purpose clearing corporation set up by AMCs of Mutual Funds.
SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2021/17: A previous circular issued by SEBI on February 2, 2021 regarding contribution of AMCs towards share capital of LPCC.
Financial Year FY 2020-21: The financial year used as the basis for calculating the Average AUM of debt oriented schemes for contribution of AMCs.
Securities and Exchange Board of India Act, 1992: The Act of Parliament under which SEBI was established and derives its powers.
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Securities and Exchange Board of India
CIRCULAR
SEBI/HO/IMD/IMD-1 DOF2/P/CIR/2021/0548 April 06, 2021
Asset Management Companies (AMCs)/
Trustee Companies/ Board of Trustees of Mutual Funds/
Association of Mutual Funds in India (AMFI)
Sir / Madam,
Subject: Setting up of Limited Purpose Clearing Corporation (LPCC) by Asset
Management Companies (AMCs) of Mutual Funds
1. SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2021/17 dated February 2, 2021
prescribed the modalities for contribution of AMCs towards share capital of
LPCC. In this regard, it was prescribed, inter alia, that the contribution from
AMCs shall be in proportion to the Average AUM of open ended debt oriented
mutual fund schemes (excluding overnight, gilt fund and gilt fund with 10-year
constant duration but including conservative hybrid schemes) managed by them
for the Financial Year (FY) 2019-20.
2. In consideration of the representation received from AMFI, paragraph 4 of SEBI
Circular No. SEBI/HO/IMD/DF2/CIR/P/2021/17 dated February 2, 2021 has
been modified to the effect that the contribution of AMCs shall be based on
Average AUM of debt oriented schemes, as detailed above, for the Financial
Year (FY) 2020-21.
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Securities and Exchange Board of India
3. All other terms and conditions as stated in SEBI circular dated February 2, 2021
shall remain the same.
4. This circular is issued in exercise of powers conferred under Section 11 (1) of
the Securities and Exchange Board of India Act, 1992, read with the provisions
of regulations 77 of SEBI (Mutual Funds) Regulations, 1996, to protect the
interest of investors in securities and to promote the development of, and to
regulate the securities market.
Yours faithfully,
Hruda Ranjan Sahoo
Deputy General Manager
Tel no.: 022-26449586
Email: hrsahoo@sebi.gov.in
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