Mutual and other Funds

13. What are the conditions under which the SEBI approved the Mutual Funds to invest in unlisted companies?

Ans: SEBI has given approval to Mutual Funds to invest in unlisted companies' equity and equity -related instruments for up to 5% of Net Asset Value (NAVs) in case of open -ended Fund and 10% in case of close -ended Funds. A part from restricting to the very low equity participation in unlisted companies, SEBI has restricted Mutual Fund from investing in unlisted companies promoted by sponsors . It has also stipulated that the price per share paid for unlisted stocks cannot be more than the price arrived at on the basis of a formula . This is one of the most important steps in bringing Mutual Fund  investment decisions in unlisted securities under the scanner.