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Corporate Laws Central Ministry of Finance Securities and Exchange Board of India Act, 1992

Timelines for deployment of funds collected by Asset Management Companies (AMCs) in New Fund Offer (NFO) as per asset allocation of the scheme

27-Feb-2025 | SEBI/HO/IMD/IMD-PoD-1/P/CIR/2025/23

SEBI has issued a circular regarding Timelines for deployment of funds collected by Asset Management Companies (AMCs) in New Fund Offer (NFO) as per asset allocation of the scheme effective from 1st April, 2025. Key Highlights- 1. As per Regulation 35(5) of the MF Regulations, AMCs must ensure that funds collected in an NFO are deployed within a reasonable period. 2. The AMC must specify achievable timelines for deploying the funds, as per the asset allocation in the Scheme Information Document (SID), and raise funds during the NFO accordingly. 3. The AMC shall deploy the funds garnered in an NFO within 30 business days from the date of allotment of units. 4. In exceptional cases, if the AMC cannot deploy the funds within 30 business days, it provides reasons in writing, including efforts made to deploy the funds, which should be presented to the AMC's Investment Committee and provisions shall be applicable to all NFOs. 5. To discourage mis-selling, under Regulation 52(4A) of the MF Regulations, for switch transactions to an NFO of a regular plan from an existing scheme managed by the same AMC, the AMC must ensure that the distribution commission paid is the lower of the commissions offered under the two schemes involved in the switch. Detailed guidelines will be provided by AMFI, in consultation with SEBI. Kindly refer to attached document for more details.

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