Procedure For Mutual Fund Registration in India

For Registration of Mutual Fund Registration in India Form-A is to be submitted.

 

A mutual Fund is established as a Trust which has sponsors, Trustees, Asset Management Company, and custodian. Sponsors and trustees are there to work as a promoter of a company. And also trustees hold its property for the benefits of the unit holder.

 

Types of Mutual Funds

 

 

  • Open Ended-  It is a collective investment scheme that can issue or redeem shares at any time. An investor will generally purchase share in the Fund directly from the Fund itself, rather than from the existing shareholders.
  • Close Ended Mutual Funds-  It is a collective scheme model based on issuing of fixed number of shares which are not redeemable from the funds. Unlike open ended funds, new shares in a close ended shares are not created by managers to meet demand from investors.
  • Interval Mutual Funds- It is a Non-Traditional type of closed end mutual funds that periodically offers to buy back a percentage of outstanding shares from the shareholders. Shareholders are not required to sell their shares back to the fund.

 

 

Key Points for Mutual Funds Registration

 

  1. All Mutual Funds should be registered as Trust under Indian trust Act, 1882.
  2. A separate AMC should be registered. The net worth of AMC must be INR 5 Crores.
  3. Investors of Mutual Funds re called as Unit Holders.
  4. Basket of Securities is called as Portfolio.
  5. Managed by Fund Manager.
  6. Value of each unit is called a Net Asset Value (NAV).
  7. An organization that manages the investments is called as Asset Management company.
  8. The sponsor should contribute at least 40% to the Net worth of AMC.
  9. Appointment of custodian in order to secure the securities.
  10. Should be carrying on business in financial services for a period of not less than 5 years and the net worth should be positive.
  11. Applicant has to be fit and proper person with a soundtrack.
  12. The main objects of the MOA of the sponsor company should permit the mutual funds activities.

 

Prerequisites for investing in Mutual Fund Plan-

 

  1. Bank Account
  2. Demat Account with Broker
  3. Documents or KYC to be enclosed
  4. Aadhar linkage of the accounts.

 

Documents required for Mutual Fund Registration

 

  1. A complete list of all associate companies/ Group Companies/ subsidiaries registered with SEBI in any capacity along with their Registration Numbers.
  2. List of instances of Violation/ non-adherence to any security related regulations enforced by any regulatory agency in India or abroad and whether any measure has been taken by you in this regard.
  3. A Declaration that the sponsor company or the Directors have not been found guilty of fraud/ misconduct etc.
  4. Details of registration of any of the companies with the RBI as NBFC or any other capacity.
  5. Two sets of MOA and AOA of AMC and Trustee Company
  6. A Detailed Business Plan
  7. A detailed note on the infrastructure employed by AMC.
  8. Auditor’s Certificate
  9. RBI/ other Regulators approval for the purpose of sponsoring Mutual Funds
  10. Executed copies of Trust Deed and Investment Management Agreement
  11. Undertaking from sponsor to provide additional capital o AMC, till its operations breakeven in order to protect the interest of Unitholders.

 

Applicant ha sto provide all the required information within 30 days from a receipt of a communication from SEBI, failing which case may be considered as Closed.

 

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