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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Legal and Regulatory Framework

Under SEBI regulations, which of the following is a requirement for a mutual fund to be set up in India as regards its legal structure?

A mutual fund in India is constituted as a trust, with the sponsor as settlor, and the trust deed is registered under the Indian Registration Act. The AMC is a separate company that manages the schemes, but the fund itself is not a company or partnership.

  1. AIt must be set up as a company with share capital
  2. BIt must be set up as a trust under the Indian Trusts Act, registered under the Indian Registration ActCorrect
  3. CIt must be set up as a partnership firm
  4. DIt must be set up as a statutory corporation by an Act of Parliament

Explanation

In India a mutual fund is constituted as a trust, with the sponsor as settlor, and the trust deed is registered under the Indian Registration Act. The AMC is a company, but the fund itself is not a company, partnership or statutory body.

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