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FAQs for Mutual Fund Intermediaries

FAQs for Intermediaries

What is the procedure for registering a mutual fund with SEBI?

A. How to get registered as a Mutual Fund?

An applicant proposing to sponsor a mutual fund (MF) in India must submit an application in Form A [first schedule of the SEBI (Mutual Funds) Regulations, 1996 (hereinafter, referred to as the Regulations)] along with a non-refundable fee of INR 5 lakh. The application is examined and once the sponsor satisfies the eligibility criteria, it is required to complete the remaining formalities for setting up a MF. These include inter alia, executing the trust deed and investment management agreement, setting up a trustee company/board of trustees comprising two-thirds independent trustees, incorporating the asset management company (AMC), contributing to at least 40% of the net worth of the AMC and appointing a custodian. Upon satisfying these conditions, the registration certificate is issued subject to the payment of registration fees of INR 25 lakh.

B. Main requirements under SEBI (Mutual Funds) Regulations, 1996:

The following are the eligibility criteria for grant of a certificate of registration as per Regulation 7 of SEBI (Mutual Funds) Regulations, 1996 (Please see SEBI web site www.sebi.gov.in)

a) The sponsor should have a sound track record and general reputation of fairness and integrity in all his business transactions.

Explanation: For the purposes of this clause “sound track record” shall mean the sponsor should,-

1. Be carrying on business in financial services for a period of not less than five years; and 2. The net worth is positive in all the immediately preceding five years; and 3. The net worth in the immediately preceding year is more than the capital contribution of the sponsor in the asset management company; and 4. The sponsor has profits after providing for depreciation, interest and tax in three out of the immediately preceding five years, including the fifth year

2. The net worth is positive in all the immediately preceding five years; and 3. The net worth in the immediately preceding year is more than the capital contribution of the sponsor in the asset management company; and 4. The sponsor has profits after providing for depreciation, interest and tax in three out of the immediately preceding five years, including the fifth year

3. The net worth in the immediately preceding year is more than the capital contribution of the sponsor in the asset management company; and 4. The sponsor has profits after providing for depreciation, interest and tax in three out of the immediately preceding five years, including the fifth year

4. The sponsor has profits after providing for depreciation, interest and tax in three out of the immediately preceding five years, including the fifth year Continue Reading………

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eMinds Legal is a Corporate Law Firm based in Gurgaon, India specializing in Corporate Legal, Corporate Secretarial and Compliance. The Firm comprises of a team of Corporate Lawyers and Company Secretaries with in-depth subject matter knowledge and participative industry experience of over 15 years.

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