SEBI on Friday cut the timelines for the payout of redemption amount and dividend to unitholders by asset management companies (AMCs). In a circular on November 25, the capital market regulator has reduced the timeline for dividends payout to seven working days from the current 15 days.

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It said that the record date would be two working days from the issue of public notice, wherever applicable, for the purpose of payment of dividend.

"The payment of dividend to the unitholders shall be made within seven working days from the record date," the Securities and Exchange Board of India (SEBI) said. It has further reduced the timeline for redemption payout to three working days from the existing 10 working days.

"The transfer of redemption or repurchase proceeds to the unitholders shall be made within three working days from the date of redemption or repurchase," SEBI said.

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For schemes investing at least 80 percent of total assets in such permissible overseas investments, the transfer of redemption or repurchase proceeds to the unitholders would be made within five working days from the date of redemption or repurchase.

In consultation with SEBI, industry body Association of Mutual Funds in India (AMFI) would publish a list of exceptional circumstances for schemes unable to transfer redemption or repurchase proceeds to investors within the prescribed time, along with applicable time frame for transfer of redemption or repurchase proceeds to the unitholders in such exceptional circumstances. The list would be published within 30 days.

The regulator said that interest for the period of delay in transfer of redemption or repurchase or dividend would be payable to unitholders at the rate of 15 percent per annum along with the proceeds of redemption or repurchase or dividend, as the case may be. Such interest would be borne by AMCs and the details of such payments would be sent to SEBI as part of Compliance Test Reports.

(Edited by : Shoma Bhattacharjee)

First Published:Nov 25, 2022 6:32 PM IST