Description

Motilal Oswal Asset Management has discontinued fresh subscriptions in the Nifty Microcap 250 Index Fund effective January 8, 2026, following SEBI consultation due to undefined microcap categorization.

Summary

Motilal Oswal Asset Management Company Limited has discontinued fresh subscriptions in the Motilal Oswal Nifty Microcap 250 Index Fund with immediate effect from the cut-off time of January 8, 2026. This action has been taken in consultation with SEBI as microcap is not defined as a category based on market capitalization. The discontinuation affects all fresh purchases, additional investments, switch-ins, and new SIP/STP registrations.

Key Points

  • Fresh and additional purchases through lump sum mode discontinued immediately
  • Switch-in transactions from other Motilal Oswal Mutual Fund schemes discontinued
  • Fresh registrations under Systematic Investment Plan (SIP) and Systematic Transfer Plan (STP) discontinued
  • Existing SIPs and STPs paused with effect from January 8, 2026
  • Any subscription amounts received after cut-off time on January 8, 2026 will be refunded without interest
  • Switch-in transactions received till January 8, 2026 up to cut-off time will be processed
  • Decision made in consultation with SEBI due to microcap not being defined as a market capitalization category

Regulatory Changes

The discontinuation has been implemented following consultation with SEBI. The regulatory basis is that microcap is not defined as a category based on market capitalization under current SEBI regulations. This represents a significant regulatory clarification affecting microcap fund categorization and operations.

Compliance Requirements

  • Asset Management Company: Must refund all subscription amounts received after the January 8, 2026 cut-off time without any interest
  • Asset Management Company: Must process only switch-in transactions received till cut-off time on January 8, 2026
  • Asset Management Company: Must pause all existing SIP and STP transactions
  • Investors: Cannot make fresh or additional purchases in the scheme
  • Investors: Cannot register new SIPs or STPs in this scheme
  • The addendum forms an integral part of the Scheme Information Document (SID) and Key Information Memorandum (KIM)

Important Dates

  • January 8, 2026: Effective date for discontinuation of fresh subscriptions (cut-off time)
  • January 8, 2026: Last date for processing switch-in transactions (up to cut-off time)
  • January 8, 2026: Existing SIPs and STPs paused from this date
  • January 8, 2026: Circular date

Impact Assessment

This discontinuation has significant impact on investors seeking exposure to microcap stocks through this index fund. Existing investors can continue to hold their units, but cannot add to their positions through any investment mode. The decision reflects broader regulatory concerns about microcap fund categorization. Investors looking for microcap exposure will need to explore alternative investment vehicles. The immediate nature of the discontinuation (with one-day notice) may affect investors with pending transactions or those who had planned systematic investments in this category. This action may set a precedent for other microcap funds in the market if SEBI’s categorization concerns extend industry-wide.

Impact Justification

Complete discontinuation of fresh subscriptions in a microcap index fund affecting all new and existing SIP/STP investments, issued in consultation with SEBI due to regulatory categorization issues.