A mutual Fund is authorized as a Trust which has sponsors, Trustees, an Asset
Management Company (AMC), and a custodian. Sponsors and trustees are there to act as a promoter
of a company. Furthermore, trustees operate their property for the advantage of the unitholder.
The management of the funds is the responsibility of the Asset Management Company (AMC), which is duly approved by the SEBI to invest the funds in different securities. The custodian who is registered with SEBI keeps in its custody the securities of various fund schemes. Trustees take care of Mutual Funds’ results and compliance with SEBI Regulations. Form-A (First Schedule of SEBI Mutual Funds Regulations) along with the non-refundable fee of Rs.5 Lacs must be completed by an applicant who is willing or proposing to sponsor the Mutual Fund.
The application is then further reviewed by the sponsors and, once the eligibility requirements have been met, it is properly passed from its further processing. After the fulfillment of the eligibility requirements of the Sponsors, the remaining formalities for the formation of a Mutual Fund are carried out, which includes, inter alia, the execution of the Trust Deed and Investment Management Agreement, the establishment of a trustee company or board of trustees consisting of two-thirds of independent trustees, the incorporation of the AMC, the donation of at least 40 percent of the net worth of the AMC and the contribution of at least 40 percent of the net worth of AMC. Accordingly, the registration certificate is issued subject to payment of the registration fee of Rs.25 Lakhs, after satisfying these requirements.
The money raised from a number of investors involved in buying the securities, shares, or bonds of the company is mutual funds. These funds, shared by a variety of investors, are managed and supervised by a skilled fund manager so that they can achieve the highest returns possible. This is how it works, not just in India, but all over the world as well.
The designated regulatory body for capital markets in India is the Securities and Exchange Board (SEBI). The Board’s primary role is to protect the interests of securities investors, to encourage and to control the securities market. By providing the requisite details, SEBI has laid the ground rules for investors to become aware of the functioning of mutual funds. They serve to simplify the wide range of mutual fund schemes that investors can sometimes find very confusing. The guidelines provided by SEBI on the merger and consolidation of mutual fund schemes aim to simplify the comparison process between the different mutual fund schemes offered by fund houses.
The division of mutual funds (MF) in India is done completely. There are different types of MF. They are as follows:
These involve sector funds, index funds, funds of funds, emerging market funds, and asset allocation funds.
The accompanying is the eligibility criteria for grant of a certificate of registration
as per Regulation 7 of SEBI (Mutual Funds) Regulations, 1996. For the aim of the grant of a certificate
of registration, the applicant has got to fulfill the subsequent, namely:-
The applicant is required to apply for registration on Form A provided for in
I of the 1996 SEBI Regulations (Mutual Funds). It may be noted here that in terms of the Act. 7(c) of
the Regulations, any person who owns 40 percent or more of the asset management company’s total assets
is considered to be a sponsor and is required to submit an application on Form A.
When you apply, please ensure that the main objectives of the sponsoring company memorandum allow for the activities of the partnership fund to continue. The applicant must also submit the following additional details of the sponsor and other shareholders to the proposed asset management company.
A complete list of your group / affiliated companies registered with SEBI for any position, also shows how registered they are with the SEBI registration number. In the case of foreign sponsors, details of the registration of sponsors / any affiliated companies/groups, or any overseas regulatory agency. You may also refer to the SEBI (Mutual Funds) Regulations for the meaning of ‘Associates’, ‘group’, and ‘control’. That any sponsor or group / affiliated company is included in any known stock transaction in India. If so, please provide details.
Whether the sponsor or its group/associate companies are listed on any of India’s recognized stock exchanges. Please, if so, include the info.
Whether there have been any instances of infringement or non-compliance by a regulatory agency in India or abroad with any securities-related regulations and whether any action against you or any of your associate/group companies in this regard has been taken(please provide the following information).
Proclamation in terms of Regulation 7 (d) of the Security Regulations and the Mutual Funds’ Exchange Board, 1996 that your sponsoring company or one of your directors has not been found guilty of fraud or has not been convicted of any misconduct or criminal misconduct. In such cases, full details should be provided
Who are the directors or employees of your company or corporate / affiliated company have been associated with any other organization such as the director or employee SEBI initiated the act of suspension or cancellation of registration certificate or commenced any action under the provisions of the SEBI Act or introduced any prosecution for actions committed during their meeting. If so, please provide details.
The application will be accompanied by a business plan.
To take money from a donor to provide AMC with additional funds, if necessary, to the extent that it is performing its functions, to protect the interests of the unemployed.
To research the following, SEBI can perform an on-site due-diligence of the
sponsor’s established businesses:
|Add: Free reserves of the company|
|Less: miscellaneous expenditure to the extent not written-off|
|Less: accumulated losses, if any|
|Less: intangible assets, if any|
|Total Net worth|
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