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Mutual Funds Company Registration

Assistance in the formation of a new Mutual fund company.
Business plan assistance with compliance support.
Generating new mutual fund products & risk assessment.
Advisory on registration application before the SEBI Board.
Review of all essential documents with the directors of the company.

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    Overview of Mutual Funds Company

    A mutual fund company is set up like trust with promoters/sponsors, Asset Management Company (AMC), Trustees, and Custodians. The no. of promoters could be more than one. The trustee of the company can hold its property for the benefit of the unitholders. 

    The AMC (must be approved by SEBI) is responsible for managing the funds by making investments in different types of securities. The custodian is also registered with SEBI, is responsible for holding securities of various schemes related to the funds in his/her custody. The trustees of these companies have been vested with the general power to supervise and direct the AMC. They are also responsible for the monitoring of performance and compliance as per SEBI norms. 

    Types of Mutual Funds:

    Close Ended: Fixed maturity plans and capital protection.
    Open-Ended: Money market/liquid, Equity/growth funds. Index scheme, sectorial scheme, Tax saving schemes, balanced funds.
    Interval Mutual funds: Allows investors trading of units at a pre-defined interval.

    The type of investments is as per the investment objectives disclosed in the offer documents. An applicant willing to register as a Mutual fund company in India has to submit Form A under Schedule I of SEBI regulations with a non-refundable fee of Rs. 5 lakhs. 

    Eligibility Norms for Mutual Funds Company Registration:

    For companies willing to get the certificate of registration, eligibility conditions set by SEBI must be met. The conditions are as per SEBI (Mutual Fund) regulation of 1996.  

    The promoters of the company must have a sound reputation for integrity and fairness in their experience and must have a clean image in the business sector.
    The applicant must have prior experience of giving financial services for more than 5 years. The net worth of the applicant must be positive for all those years.
    The net worth of the Asset management company must have 40% contribution from the sponsor.
    The promoters must not have been found guilty of fraud or have been convicted in any case involving moral turpitude.
    The promoters of the company must appoint a trustee to the mutual fund company.
    Appointment of AMC for managing the funds and operations must be done prior to application for registration. The net worth of such AMC should be at least 5 crores.
    The mutual fund must get registered as a trust under the Trust Act 1882.
    The memorandum shall state objects that will authorize the sponsor company to continue activities of the mutual funds.
    Document Required

    Documents Required For Registering As Mutual Funds Company

    Here is a quick checklist of documents required to register as a mutual fund company:

    A complete list of all group companies/associate companies/subsidiaries registered with SEBI in any capacity with their individual registration no.
    The document should also mention whether any of the sponsors or associated companies are listed in any recognised stock exchange.
    List of instances of non-adherence or violation to any securities-related regulations set by SEBI or any other regulatory agency. The report should mention what actions were taken by sponsors in this regard.
    A declaration document stating the promoter company and the directors have not been convicted in any misconduct or fraud.
    If the company is registered with RBI as an NBFC, then its registration details should also be submitted.

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      Additional Documents:

      Two sets of AoA and MoA of Asset Management Companies and the trustee company (one set for RoC and one for SEBI).
      A detailed business plan of the company with a note on the supporting infrastructure.
      The auditor’s certificate stating the sponsor’s contribution of more than 40% in the net worth of AMC and net worth value of at least Rs. 50 crores.
      Executed copies of the investment management agreement and trust deed.
      Undertaking from the promoters to give additional capital to the AMC, till its operations are breakeven for the protection of interest of its unitholders.
      All the documents must be submitted within 30 days of receiving communication from SEBI. If the promoters fail to supply the documents in the said time period then their application will be rejected.
      Filing of Scheme Offer Documents (SOD) within 6 months of directions issuance of SEBI.

      Procedure for Registering as Mutual Funds Company

      Follow this step-by-step procedure to register your Mutual fund company in India.

      1. An applicant shall apply Form A as per Schedule I SEBI (Mutual Fund) Regulations, 1996 with a non-refundable fee of INR 5 Lakh.
      2. A person who holds 40% or more net worth of AMC is deemed to be a sponsor & he is required to file an application.
      3. While a sponsor company applies for registration, it has to make sure that its MOA has a clause of object permitting to continue activities of the mutual fund.
      4. A complete list of the associated companies or group companies that are registered with SEBI in any form shall be attached to an application.
      5. Details of the promoter company or its associate company if listed on any stock exchange shall also be mentioned.
      6. Declaration stating that director or any administrative officer connected with the sponsor company has not been found guilty of fraud or has not convicted any offence involving moral turpitude.
      7. If the sponsor company is registered with RBI as a Banking Company or an NBFC, the details of the same shall also be annexed.
      8. Trust deed shall be executed along with set up of the board of trustees comprising 2/3rd of independent directors.
      9. Incorporate the Asset Management Company & the Trustee Company. Submit completed MoA & AoA of these companies.
      10. After Incorporation of these two companies, submit the auditor’s certificate certified by Chartered Accountant who certifies:
      The sponsor has contributed 40% of the net worth of AMC
      AMC has a net worth of not less than INR 10 Crore.
      The sponsor Company then must execute a trust deed & investment management agreement that has to be filed with the complete checklist.
      Complete details of Infrastructure facility should be filed with SEBI containing the following details:
      1. Address & details of the office premise
      2. Organization chart of AMC
      3. Profile of HR including that of fund managers & equity research personnel
      Appoint a custodian to the company.
      During the registration process, an applicant must provide all the required information or query raised by SEBI at any stage of the process within 30 days of communication.
      Upon satisfying the application that it is completed in all aspects; the certificate of registration is granted in Form B subject to the payment of registration fee of INR 25 Lakh.
      In cases where the sponsor does not satisfy the eligibility criteria & its application is not completed, authority can reject the same stating the reasons for the same.

       

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      Frequently Asked Questions on Mutual Funds Company Registration
      What Is The Main Function Of The Mutual Fund Company?

      The AMC that works under the mutual fund company is responsible for managing the funds of investors by making investments in different types of securities.

      What Are The Types Of Mutual Funds?

      Mutual funds are of three types:

      Close Ended: Fixed maturity plans and capital protection.

      Open-Ended: Money market/liquid, Equity/growth funds. Index scheme, sectorial scheme, Tax saving schemes, balanced funds.

      Interval Mutual funds: Allows investors trading of units at a pre-defined interval.

      What Is The Fee Paid At The Time Of Registration?

      An applicant shall apply Form A as per SEBI Schedule I (Mutual Fund) Regulations, 1996 with a non-refundable fee of INR 5 Lakh.

       

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