NFO Process and Rules
50 practice questions on this topic
What is 'FATCA' and why is it relevant to mutual fund scheme disclosures?
EXPLANATION
FATCA (Foreign Account Tax Compliance Act) is a US law that requires foreign financial institutions — including Indian AMCs — to identify accounts held by US persons and report them to US tax authorities (IRS). Indian mutual fund investors must submit FATCA self-certification. Some AMCs restrict investment by US/Canadian persons due to FATCA compliance complexity.
What is the 'Annual Report' disclosure requirement for mutual fund schemes?
EXPLANATION
Every mutual fund scheme must publish an annual report containing audited financial statements within 4 months of the financial year-end (by July 31 each year). Unit holders receive an abridged summary by email/post and can request the full annual report. The annual report contains scheme financials, portfolio details, trustee report, and auditor's report.
What is the 'exit load period' and how is it disclosed in the SID?
EXPLANATION
The exit load period is the holding period during which a redemption charge (exit load) applies. The SID must disclose the exact exit load structure — for example: '1% if redeemed within 365 days of allotment; Nil if redeemed after 365 days.' Different schemes may have different exit load periods and rates, all of which must be clearly disclosed.
What is the significance of the phrase 'SEBI does not guarantee the scheme's performance' in scheme documents?
At what price are units allotted to investors during an NFO?
What is the significance of scheme-specific 'name change' rules under SEBI regulations?
What is the NFO allotment process for oversubscribed close-ended schemes?
What are the SEBI guidelines on past performance disclosure in mutual fund advertisements?
What information about the fund manager must be disclosed in the SID?
What is the minimum corpus required for a scheme to avoid mandatory winding up as per SEBI regulations?
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