Skip to content

NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Legal Structure of Mutual Funds in India

A sponsor has set up a mutual fund and wishes to appoint the asset management company. Which of the following is a restriction that applies to the AMC under the SEBI (Mutual Funds) Regulations?

An AMC cannot act as a trustee of any mutual fund, including its own. It may carry on only specified other activities such as portfolio management and advisory services, subject to SEBI conditions, so trusteeship is a barred role regardless of board approval.

  1. AThe AMC may act as trustee of any other mutual fund provided it is approved by the AMC board
  2. BThe AMC may undertake any other business activity without restriction
  3. CThe AMC may not act as a trustee of any other mutual fundCorrect
  4. DThe AMC may act as a trustee of its own mutual fund

Explanation

An AMC cannot act as a trustee of any mutual fund. It may undertake certain permitted activities such as portfolio management services and advisory services, subject to conditions and no conflict of interest, but not unrestricted business. The AMC board approval does not override the prohibition.

Did you get it right without looking?

One question tells you little. A timed set on Legal Structure of Mutual Funds in India shows your real accuracy, how long you take and where you lose marks.

Practise Legal Structure of Mutual Funds in IndiaFree diagnostic mock

More Legal Structure of Mutual Funds in India questions