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TMI BlogRestriction on redemption in Mutual FundsX X X X Extracts X X X X X X X X Extracts X X X X ..... ircular SEBI/IMD/CIR No.5/126096/08 dated May 23, 2008, facility of restriction on redemption under any scheme of the mutual fund can be made only after the approval from the Board of Directors of the Asset Management Company (AMC) and the Trustees. The provisions are general in nature and do not specifically spell out the circumstances in which restriction on redemption may be applied; leading to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... triction on redemptions: a. Restriction may be imposed when there are circumstances leading to a systemic crisis or event that severely constricts market liquidity or the efficient functioning of markets such as: i. Liquidity issues - when market at large becomes illiquid affecting almost all securities rather than any issuer specific security. AMCs should have in place sound internal liquid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easonably unpredictable and occur in spite of appropriate diligence of third parties, adequate and effective disaster recovery procedures and systems. b. Restriction on redemption may be imposed for a specified period of time not exceeding 10 working days in any 90 days period. c. Any imposition of restriction would require specific approval of Board of AMCs and Trustees and the same should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of this circular and (ii) all the existing schemes with effect from July 01, 2016. 5. This circular is issued in exercise of the powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act 1992, read with the provision of Regulation 77 of SEBI (Mutual Funds) Regulation, 1996 to protect the interests of investors in securities and to promote the development of, a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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