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

Which of the following is a requirement for a sponsor to set up a mutual fund under the SEBI (Mutual Funds) Regulations?

A sponsor must have a sound track record and a general reputation of fairness and integrity in business dealings, along with relevant financial services experience and profitability. SEBI does not require the sponsor to be a bank or a listed foreign company.

  1. AThe sponsor must have a sound track record and general reputation of fairness and integrity in all business transactionsCorrect
  2. BThe sponsor must be a scheduled commercial bank
  3. CThe sponsor must be a foreign company listed on a recognised stock exchange
  4. DThe sponsor must hold 100% of the net worth of the AMC through debt funding

Explanation

SEBI requires the sponsor to have a sound track record, general reputation of fairness and integrity, and a record of business in financial services, along with positive net worth in the preceding years. There is no requirement to be a bank or a foreign listed company. Debt funding of AMC net worth is not a condition.

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