How to cope - When service providers change

In mutual funds investors may have to handle changes when one mutual fund is bought over by another; which involves dealing with changes in management; dealing with new people and processes.

Other changes could be because the service provider has changed. Such changes are inevitable. There are also times when an investor wants to initiate change if there are issues with a service provider or to mitigate risk of having only one service provider. Over the next couple of weeks, this column will discuss how to handle change with regard to mutual funds.

What does a change in Registrar mean for an investor?

A Registrar is the keeper of investor's records and processes transactions such as subscriptions and redemptions. When an asset management company (AMC) changes its service provider the investor has to approach the new service provider for his transactions and changes that is required to be carried out in his folio.

How does the investor know about this?

The AMC usually sends out a communication to this effect and lets its investors know who the new service provider is. The name, address and contact details of the Registrar are sent to the investors. The company may also advertise in leading newspapers about the change.

Will there be a change in the folio number?

Yes, the new Registrar will provide details of change in folio number. An account statement with the new number can be sought for records.

Can the new Registrar not retain the old folio number given by the old service provider?

The old numbers can be quoted for reference, and over a period of time, the new can replace the old numbers. Each Registrar has his own software and the logic of generation of numbers will be very different; so the new number is generated for every old folio.

Will there be changes in the manner of processing and cut-off times?

No, there will be no change in the processing and cut-off times as these are governed by SEBI, the regulator.

Will there be any break in services?

Normally, there will be no break in services. However, under exceptional circumstances, if the SEBI permits, there may be some non-business days declared to facilitate migration of the data from one service provider to another.

Will there be any change in the number of units held?

No, there will not be any change in the number of units held in any particular scheme by an investor.

Will all the holdings be reflected in the same statement?

Yes, provided all the schemes are taken over at one go by the new service provider. In some instances, there will be a movement of some schemes to the new service provider and some continue with the old. In such cases the holdings will be by the schemes handled by the two service providers.

Can an investor transfer from one scheme to another when there is a split of schemes between two service providers?

Yes, this is possible and the transactions would be treated as redemption in one scheme and a purchase in another.

What will be the tax implications of such transfers?

The tax treatment will remain unchanged and there is no impact on that.

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