Description

BSE notifies immediate discontinuation of fresh subscriptions in Motilal Oswal Nifty Microcap 250 Index Fund effective January 8, 2026, in consultation with SEBI as microcap is not defined as a category based on market capitalization.

Summary

Motilal Oswal Asset Management Company Limited has discontinued subscription in units of 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 fresh purchases, additional investments, switch-ins, and new SIP/STP registrations, while existing SIPs/STPs will be paused.

Key Points

  • Fresh and additional purchases through lump sum mode discontinued
  • 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/STPs paused effective from January 8, 2026
  • Subscription amounts received after cut-off time on January 8, 2026 will be refunded without interest
  • Switch-in transactions received until January 8, 2026 up to cut-off time will be processed
  • Action taken in consultation with SEBI due to microcap not being defined as a category based on market capitalization

Regulatory Changes

SEBI has been consulted regarding this discontinuation due to the lack of a formal definition of “microcap” as a market capitalization-based category. This represents a regulatory clarification that impacts the continued operation of the fund in its current form.

Compliance Requirements

  • Asset Management Company must refund any subscription amounts received after the cut-off time on January 8, 2026 without interest
  • All refunds must be processed in accordance with applicable regulations
  • The addendum forms an integral part of the Scheme Information Document (SID) and Key Information Memorandum (KIM)
  • All other terms and conditions of the SID and KIM remain unchanged

Important Dates

  • Effective Date: January 8, 2026 (cut-off time)
  • Circular Date: January 9, 2026
  • Last date for switch-in transactions: January 8, 2026 (up to cut-off time)

Impact Assessment

Investor Impact: Existing investors can continue holding their investments, but cannot make fresh purchases or additional investments. New investors are completely barred from entry. Existing SIP/STP arrangements are paused, affecting investors’ systematic investment plans.

Market Impact: Limited to investors and potential investors of this specific fund. The discontinuation highlights regulatory uncertainty around microcap fund categorization, which may have broader implications for similar funds in the market.

Operational Impact: Motilal Oswal AMC must implement immediate controls to reject new subscriptions, pause existing SIPs/STPs, and process refunds for any subscriptions received after the cut-off time. The fund will operate in a closed mode for new investments while continuing to manage existing assets.

Impact Justification

Affects existing and potential investors of Motilal Oswal Nifty Microcap 250 Index Fund. High severity for fund investors but medium overall impact as it's limited to one specific mutual fund scheme. Regulatory clarity issue on microcap definition.