Registration of Mutual Fund with SEBI

Start Investing and get good returns…!!
No additional cost included…

With the help of the Legalraasta Consultant, get your mutual fund registered with SEBI. We help to build a mutual fund business, provide strategy and risk management advice, support for 5 years, and more.

  • Investing comfortably in the money market and government bonds
  • Start investment with a little amount
  • One-time investment and SIPs
  • Well-researched portfolios and funds for high returns
  • Form a Mutual fund company
  • Document analysis with the company’s directors
  • 5 years of Business plan
  • Mutual fund product strategy & Risk evaluation
  • Advice and Consultation on Application before the SEBI Board

Register Mutual Fund with SEBI

  • Hidden
  • This field is for validation purposes and should be left unchanged.

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.

Based on Asset Class

  • Equity Funds: These are investments in stocks. Also known as Stock Exchanges.
  • Debt Funds: These invest in fixed security funds such as Water Funds, Bonds, Firm Maturity Plans, security and treasury funds, etc.
  • Money Market Funds: Usually, such funds are managed by the banks or corporations, and the government by distributing money market securities like bonds, dated securities, T-bills, etc.
  • Hybrid Funds: Also name Balanced Funds, is a mixture of stocks and bonds that close the gap between finance and debt financing.

Based on Investment Goals

  • Growth Fund: Such funds put an enormous part of the investment in shares and growth sectors. It’s frequently suitable for investors having a surplus of waste money.
  • Income Funds: These refer to the family of debt mutual funds. The cash is distributed during a mixture of bonds, certificates of securities, and deposits among others.
  • Liquid Funds: The utmost fund one can invest in it’s Rs. 10 lakhs. Additionally, it belongs to the category of debt fund because it invests within the debt market.
  • ELSS fund/tax-saving funds: These mutual funds are best-suited for salaried and long-term investors. Equity Linked Saving Scheme (ELSS) serves investors with the double advantage of building wealth. Moreover, it also saves on taxes with a rock bottom lock-in period of three years only.
  • Aggressive Growth Funds: These are designed to make steep financial gains.
  • Capital Protection Funds: This kind of mutual fund assists the objective of protecting your principal while getting relatively smaller returns.
  • Fixed Maturity Funds: These take down the tax stress on the investors investing in securities, bonds, money market, etc.
  • Pension Funds: In this case, the applicant puts part of his or her income into a designated Pension Fund. This will expand for a long time.

Based on Structure

  • Open-ended Funds: These funds aren’t compelled in several units or time-periods. Moreover, the investor has the option to trade funds at his own preference and exit when they need at the NAV (Net Asset Value).
  • Close-ended Funds: The unit capital to invest is fixed already. Therefore, one cannot sell extra than a pre-agreed number of units.
  • Interval Funds: This mutual fund has features of both open and closed-ended funds. No transaction is permitted for at least two years.

Based on Risk

  • Very Low-Risk Funds: Such funds could also be wont to fulfill short-term financial goals and keep the investor’s money safe while returns are less.
  • Low-Risk Funds: Investors put their money in either one or the mixture of liquid, arbitrage or ultra-short-term funds.
  • Medium-Risk Funds: As the manager invests a bit in debt and the rest in equity funds, hence, the risk part is of average level.
  • High-Risk Funds: Suggested for investors without any risk of aversion and those who try big returns in the kind of dividends and interest, etc.

Specific Mutual Funds

These involve sector funds, index funds, funds of funds, emerging market funds, and asset allocation funds.

  • The sponsor must have a soundtrack record and general reputation of honesty and sincerity in all his business transactions. For the needs of this clause “sound track record” shall mean the sponsor should-

    1. Pursue a financial services company for a term of not less than five years.
    2. The net worth is positive for all the five years immediately preceding it.
    3. The net value in the immediately preceding year is greater than the sponsor’s capital contribution to the asset management company.
    4. Since paying for depreciation, interest, and tax, the sponsor had income in three of the five years immediately preceding it, including the fifth year.
  • The candidate is a fit and proper individual.

  • Within the case of an existing mutual fund, such fund is within the sort of a trust and therefore the deed of trust has been approved by the Board.

  • The sponsor has contributed to or contributes to, at about 40 percent of the asset management company’s (AMCs) net worth.

  • Given that any individual holding 40 percent or more of the asset management company’s net worth is considered to be a sponsor and is required to comply with the eligibility requirements laid down in those regulations.

  • The sponsor or any of its directors or the principal officer to whom the mutual fund is to be employed is not guilty of fraud or is not accused of an offense involving moral turpitude or is not guilty of any economic offense.

  • Appointment of trustees, in compliance with the rules of the regulations, to serve as trustees for the mutual fund

  • Assignment of an asset management firm to administer the mutual fund and, in compliance with the terms of those regulations, to run the scheme of such funds.

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).

  1. The top ten fines in the case of foreign companies and all monetary fines in the case of Indian businesses, imposed on a sponsor or any sponsor (for misconduct/breach of financial services sector or due to errors in respect of shareholders/debtors and investors, by any regulatory body finance or government official or remuneration paid to any financial regulatory body for the past five years and details thereof. Penalties imposed on economic charges may only be disclosed in the presence of a sponsor.
  2. Details of all cases of suspension and cancellation of the certificate of registration (misconduct/breach of financial services sector or inconsistent with shareholders, loan holders, and depositors) of the sponsor or other sponsor will be disclosed 10 years ago.

All disclosures of penalties and actions taken in terms of (a) and (b) above for foreign companies may be limited to the administration of the country where the main functions (for-profit/income) of the sponsors / related companies are performed or where headquarters is located.

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

  1. Particulars of registration of your companies / affiliated companies/groups, registered/required to be registered with the Reserve Bank of India (RBI) as a Bank or NBFC Companies or any other employee.
  2. Details of the disciplinary action taken by the RBI against you or any of the group / s companies you are involved with. Please also let us know if there is a discrepancy in the payment of your investment by you or any of your group / personal companies.
  3. Details of the RBI’s consent, if any, for the purpose of funding the partnership fund.

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.

  • The current infrastructure for serving customers, managing complaints.

  • Track the complaint/grievance handling record.

  • Philosophy and practice about compliance.

  • Incorporation of the AMCs Companies and the Trustee Company/Board of trustees: For this purpose, you may submit two copies of the completed Memorandum and Articles of Association of the Asset Management Company and the Trustee Company for distribution to the Registrar of Companies.

    Please ensure that these documents contain the clause that “unless otherwise stated in these documents, only those activities are permitted under the SEBI Regulations (Mutual Funds). All provisions of the SEBI Regulations (Mutual Funds), 1996, and periodic guidelines will apply. ”

    Please also indicate the ROC address where these companies will be located.

  • Certificate of Auditor: After the addition of AMC companies and Trustee Company, please submit a certificate from the Chartered Accountant validating that:

    a) The donor has contributed at least 40% to the fair value of the AMC (Regulation 7 (c).

    b) AMC has a cost less than Rupees Ten Crore (`100 million), as expected under regulation 21 (1) (f) of the SEBI Regulations (Mutual Funds), 1996 (full price must be provided in the following format):

    Particulars Amount (`)
    Paid-up capital
    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
  • Filing of completed copies of the Agreement for Trust Deed and Investment Management: Please include copies of the trust agreement and the Investment Management Agreement and a checklist that clearly outlines the contents of the terms of the trust agreement and the Investment Management agreement in terms of schedule three and the fourth SEBI Regulations (Mutual Funds).

  • Infrastructure Setting by Applicant :

    • After complying with the above requirements, a detailed note of the resources available to the Asset Management Company should be submitted to SEBI, providing the following information:
    • Office yard details and address.
    • AMC organizational chart, which clearly describes the responsibilities of the various employees.
    • The profile of key staff members including fund managers and equity research staff.
    • Adequate adjustment of staff in fund management, equity surveys, and other workplaces taking into account the expected size of the fund. At what stage, the number of key employees to be reviewed must be indicated.
    • System support based on hardware and software.
    • Arrangements designed for investor services.
    • Establish a financial capacity to fund the Mutual Fund which provides details of the expected size of the public fund over a period of time.
    • Internal systems and control systems are designed to evaluate internal trading and past performance.
    • Financial size AMC feels it has the administrative capacity and technology available to the sponsor / AMC etc.
    • Whether a compliance manual has been prepared to ensure that all the provisions of the SEBI (Mutual Funds) Regulations and Guidelines are complied with. (All guidelines for joint funding are available on the SEBI website).
    • Submission of a completed Form C and Form D. That provides details of the Trustee Company and AMC companies, as under in the First Schedule to the SEBI Regulations (Mutual Funds).
    • Details about the directors of the Trustee Company and the AMC in the prescribed manner (Please refer to the SEBI Circle dated December 20, 2001, available on the website).
    • Bio data for key employees in hard and soft copies (Please refer to the SEBI Circle dated May 7, 1997)
    • Any other information required to apply for registration.
  • Issuance of Certificate of Registration: Once all the above requirements have been complied with and the required fees such as the Second Schedule of Regulations have been paid, SEBI will issue a certificate of registration as a partnership fund and will accept AMC. SEBI can also conduct an applicant’s infrastructure test before issuing a registration certificate.

    In addition, it may be noted that in the event that no Mutual Fund scheme is introduced within 12 months from the date of registration, the registration offered will be deemed to have been canceled.

What is a Mutual Fund?
How to set up a mutual fund?
What is the cost of the mutual fund registration?
What are the documents required in a mutual fund?
What is the procedure to get done mutual fund investment?
What are the benefits of investing through a Mutual Fund?
What is NAV?
Non-resident Indians (NRIs) can invest in mutual funds?
How much time will it take for the transfer of units after purchase from stock markets in case of close-ended schemes?
What happens to the money invested if the mutual fund scheme gets wound up?

Register Mutual Fund with SEBI

  • Hidden
  • This field is for validation purposes and should be left unchanged.