With the approval of the new regulations, small investors will find an easy forum for investing in the stock market though share market experts. [break]
“Introduction of the new regulations has opened the avenue to small investors for safe investment in the stock market. We expect that small amounts of capital scattered among the public will enter the capital market in the coming days”, said Shurbir Poudel, chairman of the Securities Board of Nepal (Sebon).
Poudel said investors would get reliable information from experts though the mutual funds so that their investments would be more secure.
Though Citizen Investment Trust (CIT)-- the state-owned mutual fund-- has been providing mutual fund services to small investors, no other company has been established for the same purpose in the absence of relevant laws and regulations.
As per the existing legal provisions, banks and financial institutions having a paid-up capital of over Rs 1 billion can operate a mutual fund service as a subsidiary company.
The regulations envisage that a new mutual fund must have paid-up capital of at least Rs 100 million.
Riding on the Securities Board Act 2006, Sebon has come up with the regulations to pave the way for setting up new mutual funds amid the long delay in the enactment of a Mutual Fund Act.
Any institution having a net worth -- difference between assets and liabilities-- less than its total paid-up capital cannot become promoter of a mutual fund.
The regulations also clearly state that a company in profit for the last three consecutive fiscal years and is not blacklisted by the government can open a mutual fund.
Banks and financial institutions interested in setting up mutual funds have to appoint trustees and managers from among those who have permission from Sebon- the security market regulator.
As per the regulations, institutions that have paid-up capital of over Rs 200 million can act as a mutual fund trustees. Trustees take responsibility for handling the mutual funds and sign agreements for the management of the fund schemes and to protect their assets.
The regulations also authorize trustees to monitor the status of implementation of mutual fund schemes.
Mutual funds registered under the new regulations would face cancellation of their registration if they fail to commence operations within one year of registration.
As per the regulations, a trustee is entitled to charge as commission a maximum of 0.5 percent of the total net assets of a mutual fund after the completion of the fiscal year.
Sebon can levy five percent of the total commission collected by the trustee as revenue. Similarly, a scheme manager can charge as fees a maximum of 2 percent of a mutual fund´s net asset.
Related story
Half-yearly review of monetary policy not as expected by capita...
-1779842101.webp)
