Maximum percentage in a company mutual fund can invest

General
1

My question is ,

Mutual funds can own how much ownership in a company,

Example,

Abc mutual fund is planning to invest in zebra limited.

What is the maximum shares of zebra limited can be bought by abc mutual fund. If total no of issued shares is 100 by zebra.

Please help me get the answer, when i google i just get bombarded with other irrelevant topics of mutual fund.

Thanks in advance…
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2

There are limits for mutual funds.
sebi says that a mutual fund cannot invest more than 10% of their portfolio in a company so as to reduce risk
i believe there is no limit to which it can invest in a company

hope this answers your questions

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3

In equity funds, the limit is 10% of the scheme for listed companies, and 5% of the scheme for unlisted equity.

In case of debt schemes, the portfolio cannot hold more than 10% in investment grade (BBB- and above) bonds of an issuer. This can be increased to 12% with the approval of the trustees. The limit does not apply to government bonds. Investment in the bonds of a particular sector, say financial services or power, cannot exceed 25% of the portfolio. Schemes can invest an additional 15% in AA rated bonds of housing finance companies. A scheme’s exposure to debt instruments of different companies belonging to the same group is limited to 20% of the assets and this can go up to 25% with the approval of the trustees. In case of unrated debt instruments, a mutual fund cannot invest more than 10% of the portfolio in a single issuer and 25% in all such securities.

A mutual fund cannot take any exposure to privately placed and unlisted securities issued by the sponsor of the mutual fund or their group companies. In case of listed securities of the sponsor and their group companies, the investment cannot exceed 25% of the scheme’s portfolio.

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4

Thanks,

5

Say a scheme of 40k cr AUM, can it buy all 100% of a company worth 400 cr?

6

Technically it is a possibility, but a MF scheme will never do this and get into the business of running a company.

Also, internal limits and other checks will forbid doing something like this.

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7

can mutual funds influence the board of a particular company to make some changes if they buy 5-10% of the company

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8

No, mutual funds themselves cannot be on boards of companies. Mutual funds are investment vehicles that pool money from multiple investors to invest in stocks, bonds, or other securities.

However, mutual funds can be significant shareholders in companies, holding a substantial portion of the company’s outstanding shares. In such cases, mutual funds may have the ability to vote on certain matters that require shareholder approval, such as the election of directors or approval of mergers and acquisitions. While mutual funds can influence the decisions made by the companies in which they invest, they do not directly participate in the management or governance of those companies.

Company boards are typically composed of individuals who are elected by the shareholders to represent their interests and oversee the management of the company. Mutual funds, as investment vehicles, do not have the legal structure or capacity to serve as board members or participate in the day-to-day management of the companies in which they invest.

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9

Thanks for answer.
Whether in such a peculiar situation as in Zee Entt , mutual funds cant propose their nominee for board seat.

Pl send link of sebi regulations in this matter.