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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Fund Distribution and Channel Management Practices

Under SEBI's framework on mutual fund distribution, which statement about the commission paid to distributors is correct?

Distributor remuneration comes through the regular plan's expense ratio as trail commission, within SEBI limits. Direct plans carry no distribution commission, and upfront commission or extra incentives outside permitted norms are not allowed.

  1. ADistributors may be paid commission only through the expense ratio of regular plans, and the AMC must not pay any additional incentive tied to special schemes outside SEBI limitsCorrect
  2. BDistributors may be paid unlimited upfront commission by the investor in addition to the scheme's expenses
  3. CCommission is paid by the AMC to distributors only for direct plans
  4. DDistributors cannot receive any commission for regular plans

Explanation

Since upfront commission was banned, distributors are paid trail commission built into the regular plan's expense ratio. Direct plans carry no distribution commission, and extra incentives beyond the permitted structure are not allowed, so the other options are wrong.

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