Baroda BNP Paribas mutual fund announces merger of medium duration and credit risk fund

The Baroda BNP Paribas Medium Duration Fund is an open-ended medium-term debt fund that invests in instruments such that the Macaulay duration of the portfolio is between three and four years, with relatively high interest rate risk and moderate credit risk. The Baroda BNP Paribas Credit Risk Fund is an open-ended debt fund that invests primarily in corporate bonds rated AA and below (excluding corporate bonds rated AA+) with relatively high interest rate risk and relatively high credit risk.

The merger of these two schemes will come into effect on 11 September. Individual communications will also be sent to existing unitholders of both schemes by email, provided an email address is available. As a result of the merger, no new scheme will come into effect.

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The proposed merger will be considered as a change in the fundamental attributes of the merged and surviving scheme, in terms of SEBI Regulation 18(15A) (Mutual Funds) Regulation. In this regard, holders of units of both plans will receive 30 days’ written notice of the merger and will have the option to exit the plans without an exit charge during the Exit Period, which begins on August 12 and ends on September 10, both days inclusive.

The merged scheme (Baroda BNP Paribas Medium Duration Fund) will cease from the effective date and unitholders of the merged scheme as at the close of business hours will be allotted units under the relevant option available in the surviving scheme (Baroda BNP Paribas Credit Risk Fund) at the last available Net Asset Value (NAV) or at the Nominal Value (in case there are no units in the relevant option of the surviving scheme). This will also include any investment received in the merged scheme during the exit window period. Units allotted to unitholders in the surviving scheme will be treated as new subscriptions in the surviving scheme. In addition, the allotment date at the time of subscription in the merged scheme will be deemed to be the allotment date for the purpose of applicability of the exit load period at the time of redemption of such units in the surviving scheme. Following the merger, there will be no change in the investment objective, asset allocation, investment pattern, annual recurring plan expenses or any other provisions contained in the scheme information document (SID) of the surviving scheme.

Unitholders of the merged and surviving scheme may note that they need not take any action in case they agree to the merger. The exit offer with no exit charge during the exit window period is purely optional and not mandatory and the exercise thereof is at the discretion of the unitholder.

Holders of existing units under the plan(s) who do not consent to the above-mentioned merger have the right to exit the plan(s) between August 12, 2024 and September 10, 2024 (both days inclusive) by 3:00 p.m. at the applicable NAV without any exit charge, if any.

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Any tax consequences arising out of the exercise of the exit option during the exit window period hereunder shall be borne by the investor in accordance with the relevant provisions as set out in the Statement of Additional Information (SAI) / Scheme Information Document (SID) / Key Information Memorandum (KIM) of Baroda BNP Paribas Mutual Fund.

Holders of units who do not exercise the exit option on or before September 10, 2024 will be deemed to have consented to the proposed change.

According to section 47(xviii) of the Income Tax Act, 1961, any transfer of units held by the unit holders in the merged scheme, in consideration of allotment of units in the surviving scheme, shall not be treated as a taxable transfer, provided that the merger is of two or more schemes of an equity oriented fund or two or more schemes of a fund which is not an equity oriented fund.

Redemption or repurchase of units of the schemes may involve capital gains or losses or business income or losses, as applicable, in the hands of the unitholder. TDS will be deducted as per applicable tax laws on redemption or repurchase of units of the schemes and such unitholders shall bear the same. Securities Transaction Tax (STT) or Stamp Duty, if applicable, on account of the amalgamation shall be borne by the AMC.

All other features, terms and conditions of the scheme(s), as set out in the SID and KIM of the scheme(s), together with any addenda issued from time to time, remain unchanged.