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nism-series-va-fundamental-attribute-change-exit-right[ MUTUAL FUND DISTRIBUTORS ]

When an AMC modifies the fundamental attributes of a mutual fund scheme, what specific statutory right is provided to the existing unitholders under SEBI regulations?

[ A ]An automatic cash compensation equal to 10% of the scheme's face value credited to their bank accounts
[ B ]The right to demand an immediate doubling of their unit holding balance without paying additional funds
[ C ]The right to compulsorily convert their units into equity shares of the Asset Management Company
[ D ]The right to exit the scheme at the prevailing Net Asset Value (NAV) without paying any exit load within a window of not less than 30 calendar days[ CORRECT ]
Takeaway

Option D is correct: The right to exit the scheme at the prevailing Net Asset Value (NAV) without paying any exit load within a window of not less than 30 calendar days

Derivation
Under Regulation 22(9)(c) of SEBI (Mutual Funds) Regulations, 2026, no change in the fundamental attributes, fees, or expenses of a scheme can be carried out unless: (1) written communication (including email/SMS) is sent to every unitholder, (2) notice is published in newspapers and displayed on the website, and (3) unitholders are given an exit window of not less than 30 calendar days to redeem at the prevailing NAV without any exit load. This question tests core unitholder protection rights. A frequent misconception is believing investors receive arbitrary financial compensation.
Why the others fail
A — An automatic cash compensation equal to 10% of the scheme's face value credited to their bank accounts
No fixed cash compensation is paid; unitholders simply receive the right to redeem their units at prevailing NAV without exit load.
B — The right to demand an immediate doubling of their unit holding balance without paying additional funds
Unit balances cannot be arbitrarily doubled or expanded without corresponding additional capital subscription from the unitholder.
C — The right to compulsorily convert their units into equity shares of the Asset Management Company
Mutual fund unitholders hold beneficial ownership in scheme assets, not equity ownership in the corporate AMC entity.