In order to facilitate transferability of units of mutual funds held in one demat account to another demat account, The Securities and Exchange Board of India (SEBI) has asked all AMCs to clarify through an addendum that units of all mutual fund schemes held in demat form shall be freely transferable from the date of the issue of said addendum. The addendum should be issued not later than October 1, 2010. However, restrictions on transfer of units of ELSS schemes during the lock-in period shall continue to be applicable as per the ELSS Guidelines.
Elucidating the need for the order, SEBI said Regulation 37(1) of SEBI (Mutual Fund) Regulations, 1996, states that a unit unless otherwise restricted or prohibited under the scheme, shall be freely transferable by act of parties or by operation of law. However, it was noticed that mutual fund schemes prohibit transfer on a regular basis instead of on an exceptional basis.
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