https://v2.webnotes.in/tags/75-percent-rule-unitholder/Recent content in 75-Percent-Rule-Unitholder on WebNotesHugoen-INTue, 19 May 2026 00:00:00 +0000https://v2.webnotes.in/75-percent-rule-unitholder/Tue, 19 May 2026 00:00:00 +0000https://v2.webnotes.in/75-percent-rule-unitholder/<p>The <strong>75% rule</strong> is the SEBI-mandated unitholder approval threshold for material changes to mutual fund schemes. Any change in fundamental scheme attributes (e.g., scheme merger, conversion to different category, wind-up, fundamental change in investment strategy) requires 75% of unit value to consent before the change can proceed.</p> <h2 id="framework">Framework</h2> <h3 id="statutory-basis">Statutory basis</h3> <p>Per <a href="https://v2.webnotes.in/sebi-mutual-fund-regulations-1996/">SEBI (Mutual Funds) Regulations 1996</a> :</p> <ul> <li>Material changes require 75% by value (not by headcount) of unit holders to consent.</li> <li>Approval mechanism: voting / ballot.</li> <li>Trustee company supervises the process.</li> </ul> <h3 id="what-counts-as-material">What counts as material</h3> <ul> <li>Scheme <a href="https://v2.webnotes.in/scheme-merger-conversion-rules/">merger or conversion</a> .</li> <li>Change in fundamental investment strategy.</li> <li>Change in scheme category.</li> <li>Scheme wind-up (e.g., <a href="https://v2.webnotes.in/franklin-templeton-april-2020-wind-up/">Franklin Templeton April 2020</a> ).</li> </ul> <h3 id="routine-changes-excluded">Routine changes excluded</h3> <ul> <li>Fund manager change.</li> <li>TER change within SEBI caps.</li> <li>Operational policy refinements.</li> </ul> <h2 id="operational-mechanics">Operational mechanics</h2> <h3 id="notification">Notification</h3> <ul> <li>AMC publishes addendum to SID.</li> <li>Notifies unit holders via email + postal.</li> <li>30-day notification window.</li> </ul> <h3 id="voting">Voting</h3> <ul> <li>Postal ballot or electronic vote.</li> <li>75% by value threshold (not headcount).</li> <li>Smaller unitholders&rsquo; total weight matters.</li> </ul> <h3 id="implicit-consent">Implicit consent</h3> <ul> <li>Investors who do not vote typically deemed to consent.</li> <li>Active dissent requires explicit no-vote.</li> </ul> <h2 id="notable-cases">Notable cases</h2> <ul> <li><a href="https://v2.webnotes.in/franklin-templeton-april-2020-wind-up/">Franklin Templeton April 2020 wind-up</a> : The trustee initially attempted unit-holder approval; the Supreme Court eventually authorised the wind-up.</li> <li><a href="https://v2.webnotes.in/multi-cap-reclassification-2020/">Multi-cap reclassification (2020)</a> : Most multi-cap schemes migrated to Flexicap; the 75% threshold typically met by default in subsequent voting.</li> </ul> <h2 id="investor-implications">Investor implications</h2> <ul> <li>Voting matters; active participation can influence outcomes.</li> <li>Material changes typically meet 75% threshold (small dissent is normal).</li> <li>Exit-load-free redemption window provides alternative if disagree.</li> </ul> <h2 id="see-also">See also</h2> <ul> <li><a href="https://v2.webnotes.in/sebi-mutual-fund-regulations-1996/">SEBI (Mutual Funds) Regulations 1996</a> </li> <li><a href="https://v2.webnotes.in/scheme-merger-conversion-rules/">Scheme merger and conversion rules</a> </li> <li><a href="https://v2.webnotes.in/scheme-reorganisation-merger-conversion/">Scheme reorganisation, merger, conversion</a> </li> <li><a href="https://v2.webnotes.in/franklin-templeton-april-2020-wind-up/">Franklin Templeton April 2020 wind-up</a> </li> <li><a href="https://v2.webnotes.in/multi-cap-reclassification-2020/">Multi-cap reclassification (2020)</a> </li> <li><a href="https://v2.webnotes.in/unit-holder-rights/">Unit-holder rights</a> </li> <li><a href="https://v2.webnotes.in/trust-structure-mf/">Trust structure (sponsor, trustee, AMC, custodian)</a> </li> <li><a href="https://v2.webnotes.in/mutual-funds-india/">Mutual funds in India</a> </li> <li><a href="https://v2.webnotes.in/sebi-mutual-fund-regulations-1996/">SEBI (Mutual Funds) Regulations 1996</a> </li> <li><a href="https://v2.webnotes.in/amfi-association-of-mutual-funds/">AMFI</a> </li> <li><a href="https://v2.webnotes.in/sebi/">SEBI</a> </li> </ul> <h2 id="external-references">External references</h2> <ul> <li><a href="https://www.sebi.gov.in/">SEBI</a> </li> <li><a href="https://www.amfiindia.com/">AMFI India</a> </li> </ul> <h2 id="references">References</h2> <ol> <li>SEBI (Mutual Funds) Regulations 1996.</li> <li>AMFI Best Practice Guidelines.</li> </ol>