SEBI's decision to give investors the final say in winding up of schemes has reignited the debate on whether investors or fund managers should decide the future of a scheme.
Top AMC executives say that while it's good to give control in the hands of investors, the decision will lead to positive results only when the unitholders act maturely.
"Whether investors know more than the fund managers is a point of debate. Moreover, what is the point in bringing a law after an event that has already happened," said an AMC CEO.
A top executive of another AMC said the decision of investors might be influenced by previous experiences and not on a proper analysis of the prevailing scenario. He said, "For example, what happened in the past might act as a reference point for investors whenever an AMC decides to wind up a scheme and this can cause problems for all unitholders".
"But they might not consider the fact that this time the results might be different. There's an equal chance that the papers may get worse with time," the CEO said.
However, Sandeep Parekh, MD of Finsec Law Advisors, has a different take on the matter. According to him, the new rule streamlines the process and brings predictability.
"It brings predictability. The consent was required earlier also. Now, the sequencing and permissions needed are being made more clear. Once the final rules are out, there will be more clarity," he said.
In a board meeting held on Tuesday, SEBI decided to make it compulsory for mutual funds to take the consent of unitholders before winding up a scheme.
"The trustees shall obtain consent of the unitholders by simple majority of the unitholders present and voting on the basis of one vote per unit held and publish the results of voting within 45 days of the publication of notice of circumstances leading to winding up," SEBI said.
"In case the trustees fail to obtain the consent, the scheme shall open for business activities from the second business day after publication of results of voting," the regulator added.
