NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Legal Structure of Mutual Funds in India
Which of the following is a condition for a sponsor to set up a mutual fund under SEBI regulations?
A sponsor must have a sound track record and a general reputation of fairness and integrity in all its business transactions. SEBI also looks for a business record of at least five years and positive net worth, but there is no requirement to be a bank or foreign firm.
- AThe sponsor must have a sound track record and general reputation of fairness and integrityCorrect
- BThe sponsor must be a scheduled bank
- CThe sponsor must be a foreign company
- DThe sponsor must hold 100% of the units of the fund
Explanation
SEBI requires a sponsor to have a sound track record, a general reputation of fairness and integrity, and profits in the past five years, among other things. Sponsors need not be banks or foreign entities, and they do not hold units of the fund.
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