Description

Motilal Oswal Asset Management has discontinued fresh subscriptions in its Nifty Microcap 250 Index Fund with immediate effect from January 8, 2026, following SEBI consultation as microcap is not defined as a market capitalization category.

Summary

Motilal Oswal Asset Management Company Limited has announced the immediate discontinuation of fresh subscriptions in the Motilal Oswal Nifty Microcap 250 Index Fund, effective 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. All fresh purchases, SIPs, and STPs have been halted, and existing SIPs/STPs will be paused from the effective date.

Key Points

  • Fresh and additional purchases through lump sum mode discontinued with immediate effect
  • Switch-in transactions from other Motilal Oswal Mutual Fund schemes stopped
  • Fresh registrations under Systematic Investment Plan (SIP) and Systematic Transfer Plan (STP) discontinued
  • Existing SIPs and STPs paused from January 8, 2026
  • Switch-in transactions received until cut-off time on January 8, 2026 will be processed
  • Subscription amounts received after cut-off time will be refunded without interest
  • Decision taken in consultation with SEBI due to lack of microcap definition as market capitalization category

Regulatory Changes

The discontinuation is implemented following consultation with SEBI, which has determined that microcap is not defined as a category based on market capitalization. This regulatory clarification has necessitated the immediate halt of fresh subscriptions in this index fund category.

Compliance Requirements

  • AMC to refund any subscription amounts (including SIP, STP) received after the cut-off time on January 8, 2026 to respective investors without interest
  • All pending switch-in transactions received until cut-off time on January 8, 2026 must be processed
  • Existing investors’ SIPs and STPs to be paused with immediate effect
  • This addendum forms integral part of the Scheme Information Document (SID) and Key Information Memorandum (KIM)
  • All other terms and conditions of SID and KIM remain unchanged

Important Dates

  • January 8, 2026 (Cut-off time): Effective date for discontinuation of fresh subscriptions
  • January 8, 2026: Last date for processing switch-in transactions received until cut-off time
  • January 8, 2026 onwards: Existing SIPs/STPs paused

Impact Assessment

Investor Impact: Existing investors can continue holding their units but cannot make additional investments. All existing SIP and STP mandates are paused, preventing automated investments. New investors are completely barred from entering the scheme.

Market Impact: The discontinuation affects one of the few index funds tracking the microcap segment. Investors seeking microcap exposure through this fund will need to explore alternative investment options.

Regulatory Significance: This action highlights SEBI’s stance on fund categorization and market capitalization definitions. The lack of a formal microcap category definition has resulted in operational changes for fund houses offering microcap-focused products.

Operational Impact: The AMC must manage refunds for post-cutoff subscriptions, pause all existing SIP/STP mandates, and update scheme documentation. Investors with active SIPs will need to redirect their systematic investments to other schemes if they wish to continue monthly investments.

Impact Justification

Complete discontinuation of fresh subscriptions in a mutual fund scheme affects all new and existing investors, with immediate pausing of SIPs/STPs. High impact due to regulatory action following SEBI consultation on microcap category definition.