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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 the board of trustees of a mutual fund (or the directors of the trustee company) under SEBI regulations?

At least two-thirds of the trustees must be independent, meaning not associated with the sponsor in any manner. This ensures unit holders' interests are protected through independent oversight of the AMC and the sponsor.

  1. AAll trustees must be nominees of the sponsor
  2. BAt least two-thirds of the trustees must be independent persons who are not associated with the sponsorCorrect
  3. COnly one trustee is required to be independent
  4. DTrustees cannot be changed once appointed

Explanation

SEBI requires that at least two-thirds of the trustees be independent persons not associated with the sponsor in any manner. Therefore a board made up entirely of sponsor nominees, or with only one independent member, does not comply.

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