{"id":3233,"date":"2021-03-12T05:57:55","date_gmt":"2021-03-12T05:57:55","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=3233"},"modified":"2021-03-12T06:00:07","modified_gmt":"2021-03-12T06:00:07","slug":"guidelines-for-votes-cast-by-mutual-funds-prescribed-by-sebi","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/guidelines-for-votes-cast-by-mutual-funds-prescribed-by-sebi\/","title":{"rendered":"Guidelines for Votes Cast by Mutual Funds Prescribed by SEBI"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The Securities and Exchange Board of India (SEBI), by way of the powers bestowed under the provisions of section 11 (1) of SEBI Act 1992, read with the provisions of Rule 77 of the SEBI (Mutual Funds) Regulations 1996, has issued guidelines for Votes Cast by Mutual Funds.<\/p>\n\n\n\n<p>Further, such guidelines were issued by\nthe SEBI Circular No SEBI\/HO\/IMD\/DF4\/CIR\/P\/2021\/29, issued on 05.03.2021. Also,\nit shall be noted that the guidelines issued will come into force form\n01.04.2021, except paragraph 2, as the same will come into effect from the date\nmentioned.<\/p>\n\n\n\n<p>In this learning blog, we will deal with the notion of Mutual Funds, together with the Guidelines\nfor Votes Cast by Mutual Funds.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3a8f546004d\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3a8f546004d\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/blog\/guidelines-for-votes-cast-by-mutual-funds-prescribed-by-sebi\/#Concept_of_Mutual_Funds\" title=\"Concept of Mutual Funds\">Concept of Mutual Funds<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/blog\/guidelines-for-votes-cast-by-mutual-funds-prescribed-by-sebi\/#Reasons_for_Issuing_Guidelines_for_Votes_Cast_by_Mutual_Funds\" title=\"Reasons for Issuing Guidelines for Votes Cast by Mutual\nFunds\">Reasons for Issuing Guidelines for Votes Cast by Mutual\nFunds<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/blog\/guidelines-for-votes-cast-by-mutual-funds-prescribed-by-sebi\/#Additional_Guidelines_Issued_by_SEBI_for_Votes_Cast_by_Mutual_Funds\" title=\"Additional Guidelines Issued by SEBI for Votes Cast by\nMutual Funds\">Additional Guidelines Issued by SEBI for Votes Cast by\nMutual Funds<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/blog\/guidelines-for-votes-cast-by-mutual-funds-prescribed-by-sebi\/#Passive_Investment_Schemes\" title=\"Passive Investment Schemes\">Passive Investment Schemes<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/blog\/guidelines-for-votes-cast-by-mutual-funds-prescribed-by-sebi\/#Remaining_Provisions\" title=\"Remaining Provisions\">Remaining Provisions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/blog\/guidelines-for-votes-cast-by-mutual-funds-prescribed-by-sebi\/#No_Economic_Interest_on_the_Voting_Day\" title=\"No Economic Interest on the Voting\nDay \">No Economic Interest on the Voting\nDay <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/blog\/guidelines-for-votes-cast-by-mutual-funds-prescribed-by-sebi\/#Views_of_Fund_Managers\" title=\"Views of Fund Managers\">Views of Fund Managers<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/swaritadvisors.com\/blog\/guidelines-for-votes-cast-by-mutual-funds-prescribed-by-sebi\/#Submission_of_Declaration\" title=\"Submission of Declaration\">Submission of Declaration<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/swaritadvisors.com\/blog\/guidelines-for-votes-cast-by-mutual-funds-prescribed-by-sebi\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Concept_of_Mutual_Funds\"><\/span>Concept of Mutual Funds<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The term Mutual Funds (MF) signifies one\nof the most chosen investment optionsthese days. It is an investment vehicle formed\nwhen an Asset Management Company (AMC) or fund houses pool in the investment\ngathered from several institutional investors and individuals against the\ncommon investment objectives. <\/p>\n\n\n\n<p>Further, the money collected is then\ninvested in various capital market instruments, such as debentures, shares, and\nother securities.<\/p>\n\n\n\n<p>Also, the income generated by way of\nthese instruments and capital appreciation is shared with the unit holders in\nproportion to the total units owned by them.<\/p>\n\n\n\n<p>Therefore, it shall be noted that Mutual Fund is one of the most appropriate investment for a common man as it provides them with an opportunity to invest in a professionally managed, diversified basket of securities, that, too, at relatively very low cost.<\/p>\n\n\n\n<p><strong>Also, Read: <\/strong><mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/blog\/revised-framework-for-innovation-sandbox-prescribed-by-sebi\/\">Revised Framework for Innovation Sandbox Prescribed by SEBI<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Reasons_for_Issuing_Guidelines_for_Votes_Cast_by_Mutual_Funds\"><\/span>Reasons for Issuing Guidelines for Votes Cast by Mutual\nFunds<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>SEBI, by way of the&nbsp;circulars, as follows, has\nprescribed the guidelines concerning Votes Cast by Mutual Funds:<\/p>\n\n\n\n<ul><li><strong>Circular no.\nSEBI\/IMD\/CIR No\/18\/198647\/2010, issued on15.03.2010;<\/strong><strong><\/strong><\/li><li><strong>Circular no\nCIR\/IMD\/DF\/05\/2014, issued on 24.03.2014; <\/strong><strong><\/strong><\/li><li><strong>Circular no SEBI\/HO\/IMD\/DF2\/CIR\/P\/2016\/68,\nissued on 10.08.2016, <\/strong>and;&nbsp;<\/li><li>Circular\nno <strong>CIR\/CFD\/CMD1\/168\/2019, issued on 24.12.2019;<\/strong><strong><\/strong><\/li><\/ul>\n\n\n\n<p>Further, in order to\nimprove and infuse more transparency as well as to encourage Mutual Funds\/AMCs\n(Asset Management Companies) to thoroughly exercise their voting rights in the\nbest interest of the unit holders and on the basis of the deliberations in\nMFAC, SEBI has prescribed some additional guidelines.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Additional_Guidelines_Issued_by_SEBI_for_Votes_Cast_by_Mutual_Funds\"><\/span>Additional Guidelines Issued by SEBI for Votes Cast by\nMutual Funds<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Additional Guidelines for Votes Cast\nby Mutual Funds are as follows:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Passive_Investment_Schemes\"><\/span>Passive Investment Schemes<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>All the Mutual Funds that\ncomprise their passive investment schemes, such as Index Funds, ETFs (Exchange\nTraded Funds) etc., shall be needed to cast votes mandatorily in respect of the\nresolutions as follows:<\/p>\n\n\n\n<ul><li>Matters\nspecified at Paragraph no. 4 (iii) of SEBI Circular no SEBI\/ IMD\/ CIR\nNo\/18\/198647\/ 2010, issued on 15.03.2010;<\/li><\/ul>\n\n\n\n<ol><li>Corporate\ngovernance matters, inclusive of changes in the state of incorporation, merger,\nand other modes of corporate restructuring, and anti-takeover provisions;<\/li><li>Alterations\nto the Capital Structure, including the increases and decreases of capital,\ntogether with preferred stock issuances;<\/li><li>Stock\nOption Plan and any other Management Compensation Issues;<\/li><li>Issues\nconcerning Social and Corporate Responsibility;<\/li><li>Appointment\nand Removal of Directors;<\/li><li>Any\nother matter that may affect the shareholders interest in general and the\ninterest of the unit holders in particular;<\/li><\/ol>\n\n\n\n<ul><li>Related Party Transactions\n(RPT) of the investee companies (exclusive of own group companies). Further, for\nthis purpose, it shall be noted that \u201cRelated Party Transactions\u201d will have the\nsame meaning as given to them under the provisions of clause (zc) of sub\nregulation (1) of Rule (2) of the SEBI (Listing Obligation and Disclosure\nRequirements) Regulations 2015.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Remaining_Provisions\"><\/span>Remaining Provisions<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>For all the remaining\nresolutions that are not covered under paragraph 1 of this circular, MF (Mutual\nFunds) shall also mandatorily be needed to cast their votes from 01.04.2022. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"No_Economic_Interest_on_the_Voting_Day\"><\/span>No Economic Interest on the Voting\nDay <span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Ifin case the Mutual\nFunds do not have any economic interest on the voting day, the same will be\nexempted from mandatorily casting of votes.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Views_of_Fund_Managers\"><\/span>Views of Fund Managers<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The vote will be cast at the Mutual Fund\nLevel. However, it shall be noted that in case the Fund Manager of any specific\nmutual fund scheme has a strong view point against the views expressed by the\nFund Manager of the other schemes, then, in that case, the voting at the scheme\nlevel will be allowed, subject to the recording of detailed reasoning for the\nsame.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Submission_of_Declaration\"><\/span>Submission of Declaration<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>It shall be noted that\nFund Managers or Decision makers will require to submit a declaration on a\nquarterly basis to the Trustees, stating that the votes cast by them have not\nbeen prejudiced by any factor other than the best interests of the unit\nholders. Also, the Trustees in their Half-Yearly Trustee Report, which they\nfurnish to <a href=\"https:\/\/www.sebi.gov.in\/\">SEBI<\/a>, need to confirm the\nsame.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In a nutshell, the main rationale behind the passing of guidelines for Votes Cast by Mutual Funds was to improve the market conditions, to infuse more transparency, and to encourage Mutual Funds and Asset Management Companies to carefully exercise their voting rights in the best interest of the unit holders.<\/p>\n\n\n\n<p><strong>Also, Read: <\/strong><mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/blog\/sebi-guidelines-for-issue-of-debentures-in-india\/\">SEBI Guidelines for Issue of Debentures in India<\/a><\/mark><\/p>\n\n\n<a href=\"https:\/\/swaritadvisors.com\/blog\/wp-content\/uploads\/2021\/03\/Votes-Cast-by-Mutual-Funds-Prescribed-by-SEBI.pdf\" class=\"pdfemb-viewer\" style=\"\" data-width=\"max\" data-height=\"max\"  data-toolbar=\"bottom\" data-toolbar-fixed=\"off\">Votes-Cast-by-Mutual-Funds-Prescribed-by-SEBI<br\/><\/a>\n<p class=\"wp-block-pdfemb-pdf-embedder-viewer\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Securities and Exchange Board of India (SEBI), by way of the powers bestowed under the provisions of section 11 (1) of SEBI Act 1992, read with the provisions of Rule 77 of the SEBI (Mutual Funds) Regulations 1996, has issued guidelines for Votes Cast by Mutual Funds. Further, such guidelines were issued by the [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":3234,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[50,64],"tags":[486],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/3233"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=3233"}],"version-history":[{"count":7,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/3233\/revisions"}],"predecessor-version":[{"id":3242,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/3233\/revisions\/3242"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/3234"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=3233"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=3233"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=3233"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}