LEGAL AND REGULATORY

ENVIRONMENT OF MUTUAL FUNDS IN

INDIA

LEGAL STATUS OF

FUND SPONSORS

‘any person who, acting alone or in combination with another body

corporate, establishes a mutual fund’

LEGAL STATUS OF FUND SPONSORS

As per SEBI regulation ‘SPONSOR’ is defined as

LEGAL STATUS OF FUND SPONSORS

• The application to SEBI for registration of a mutual fund is made by the sponsor/s

• Since sponsors are the main people behind the mutual fund operation, eligibility criteria has been specified by SEBI

LEGAL STATUS OF FUND SPONSORS• Eligibility criteria has been specified by

SEBI as follows:

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

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LEGAL STATUS OF FUND SPONSORS• Eligibility criteria has been specified by

SEBI as follows

Sponsor should be carrying on business in financial services for 5 years

2

LEGAL STATUS OF FUND SPONSORS• Eligibility criteria has been specified by

SEBI as follows

Sponsor should have positive net worth (share capital plus

reserves minus accumulated losses) for each of those 5 years

3

LEGAL STATUS OF FUND SPONSORS• Eligibility criteria has been specified by

SEBI as follows

Latest net worth should be more than the amount that the sponsor

contributes to the capital of the AMC

4

LEGAL STATUS OF FUND SPONSORS• Eligibility criteria has been specified by

SEBI as follows

The sponsor should have earned profits, after providing for depreciation and

interest, in three of the previous five years, including the latest year.

5

LEGAL STATUS OF FUND SPONSORS• Eligibility criteria has been specified by

SEBI as follows

The sponsor needs to have a minimum 40% share holding in the

capital of the AMC

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LEGAL STATUS OF FUND SPONSORS• Eligibility criteria has been specified by

SEBI as follows

Further, anyone who has more than 40% shareholding in the AMC is considered

to be a sponsor, and should therefore fulfillThe eligibility criteria mentioned above

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LEGAL STATUS OF FUND SPONSORS• Eligibility criteria has been specified by

SEBI as follows

The sponsor should be a fit and proper person for this kind of operation

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