Setting up mutual funds

Introduction

How to register as a mutual fund
SEBI guides the applicant step by step after receiving the application for registration as a mutual fund. Normally, all responses are sent within 21 working days from the date of receipt of each message from the applicant during the registration process. So the total registration time depends on how quickly the applicant fulfills the requirements. Main Requirements under SEBI (Mutual Funds) Regulations, 1996: Below are the eligibility criteria for grant of registration certificate under Regulation 7 of SEBI (Mutual Funds) Regulations, 1996 (see SEBI website http://www.sebi.gov.in)

For the purpose of grant certificate of registration, the applicant must comply with the following, namely:

-a) The sponsor should be of good standing and a general reputation for honesty and integrity in all its business dealings;

Explanation: For the purposes of this paragraph, “good track record” means that the sponsor should:-

I. have been engaged in the financial services business for a period of at least five years; and II. Net worth is positive in all of the immediately preceding five years; and

III. The net worth in the immediately preceding year is greater than the sponsor’s capital contribution to the management company; and

IV. The sponsor has made a profit after depreciation, interest and tax in three of the immediately preceding five years, including the fifth year.

Aa) the applicant is a fit and proper person.

b) in the case of an existing mutual fund, this fund is in the form of a trust fund and the trust deed has been approved by the board;

c) the sponsor has contributed or is contributing at least 40% of the net assets of the management company; Provided that any person holding 40% or more of the net assets of the management company shall be deemed to be a sponsor and shall meet the eligibility criteria set forth in these regulations;

d) the sponsor or any of its directors or principal officer to be employed in the mutual fund should not be guilty of fraud or convicted of an offense involving moral turpitude or found guilty of any economic offence.

E) appointment of trustees to office mutual fund administrators in accordance with the provisions of the regulations; f) appointing a management company to manage the mutual fund and d operate the system of these funds in accordance with the provisions of these regulations; g) appointing an administrator to keep securities in safekeeping and perform administrator activities that may be assigned to the administrator .
Application for Registration
:The applicant should apply for registration in Form A prescribed under Schedule I of the SEBI (Mutual Funds) Regulations, 1996. It may be noted here that as per the proviso to Or. 7 © of the Regulations, any person holding 40% or more of the net assets of the asset management company will be treated as a sponsor and will be required to make an application in Form A. When applying, please ensure that the main subjects of the sponsoring company’s memorandum they allow it to operate a mutual fund. The applicant should also submit the following additional information for the sponsor and other shareholders of the proposed management company.
Complete list of your group/associate companies registered with SEBI in any capacity, also mention the capacity in which they are registered and SEBI registration number. In case of foreign sponsors, details of registration of the sponsor/any of its affiliates/group companies with any regulatory agency abroad You may also refer to SEBI (Mutual Funds) Regulations for definition of ‘Associates’, ‘Group’ and ‘Control’ .)
Whether any of the sponsors or its group/affiliate companies are listed on any of the recognized stock exchanges in India. If yes, please provide details.
Whether there have been any instances of violation or non-compliance of any securities related regulations and whether any action has been taken against you or any of your affiliates/group companies in this regard by a regulatory agency in India or abroad; (please provide the following information)
a) Top 10 monetary penalties in the case of foreign entities and all monetary penalties in the case of Indian entities imposed on the sponsor or any associate of the sponsor (for irregularities/violations in the financial services sector or non-compliance with obligations to shareholders/debenture holders and depositors, by any financial regulatory authority or by a government authority or settlement delivered to any financial regulatory authority during the last five years and details thereof. Fines imposed for economic offenses can only be disclosed in the case of a sponsor.

b) Details of all cases of suspension and cancellation of certificate of registration (for irregularities/violations in the financial services sector or for non-performance relating to shareholders, bondholders and depositors) of the sponsor or any associate of the sponsor shall be published for the last 10 years. Any disclosure of sanctions and measures taken under (a) and (b) above against foreign entities may be limited to the jurisdiction of the country where the main activities (in terms of income/revenue) of the sponsors/partners are 4 Declaration in terms of Regulation 7(d) of the Council Regulation of the Securities and Exchange of India (Mutual Funds) Act, 1996 that your sponsor company or any of your directors have not been found guilty of fraud or have been convicted of an offense involving moral turpitude or have not been found guilty of any economic offence. If such cases arise, full details should be provided.5 (a) Registration details of your company/affiliates/group companies which are registered/compulsorily registered with the Reserve Bank of India (RBI) as a banking or other company. Banking Finance Company or in any other capacity. (b) Details of disciplinary proceedings taken by RBI against you or any of your group/affiliates. Please also inform us in case there is any delay in repayment of deposits by you or any of your group / affiliate companies.

Conclusion

Details of RBI approval, if required, for sponsoring a mutual fund. Whether any of the directors or employees of your company or your group / affiliates has ever been b) Details of all cases of suspension and cancellation of certificate of registration (for irregularities/violations in the financial services sector or for non-performance relating to shareholders, bondholders and depositors) of the sponsor or any associate of the sponsor shall be published for the last 10 years.

Any disclosure of sanctions and measures taken under (a) and (b) above against foreign entities may be limited to the jurisdiction of the country where the main activities (in terms of income/revenue) of the sponsors/partners are 4 Declaration in terms of Regulation 7(d) of the Council Regulation of the Securities and Exchange of India (Mutual Funds) Act, 1996 that your sponsor company or any of your directors have not been found guilty of fraud or have been convicted of an offense involving moral turpitude or have not been found guilty of any economic offence. If such cases arise, full details should be provided.

5 (a) Registration details of your company/affiliates/group companies which are registered/compulsorily registered with the Reserve Bank of India (RBI) as a banking or other company. Banking Finance Company or in any other capacity.

(b) Details of disciplinary proceedings taken by RBI against you or any of your group/affiliates. Please also inform us in case there is any delay in repayment of deposits by you or any of your group / affiliate companies.

(c) Details of RBI approval, if required, for sponsoring a mutual fund.

6. Whether any of the directors or employees of your company or your group / affiliates has ever been associated with any organization as a director or employee against whom SEBI has initiated suspension or cancellation of registration certificate or initiated any other action under the provisions of the SEBI Act or initiated any prosecution for acts committed during their association.

If yes, give details.7. A business plan shall be attached to the application.

8. The sponsor’s commitment to provide the AMC with additional capital, if required, until such time as its operation breaks down, to protect the interests of the unitholders with any organization as a director or employee against whom SEBI has initiated suspension or cancellation of registration certificate or initiated any other action under the provisions of the SEBI Act or initiated any prosecution for acts committed during their association. If yes, give details.7. A business plan shall be attached to the application.

8. The sponsor’s commitment to provide the AMC with additional capital, if required, until such time as its operation breaks down, to protect the interests of the unitholders

Reference
https://economictimes.indiatimes.com/making-your-first-mutual-fund-investment/tomorrowmakersshow/69426896.cms

https://www.sebi.gov.in/otherentry/oct-2002/how-to-get-registered-as-a-mutual-fund_20312.html

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

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