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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 statutory condition regarding the board of directors of an AMC under SEBI Mutual Fund Regulations?

At least 50% of an AMC's directors must be independent, meaning not associated with the sponsor or its subsidiaries. This safeguard keeps the board free from sponsor influence and protects unit holders, so boards made up wholly or mostly of sponsor nominees would not comply.

  1. AAt least 50% of the directors must be independent directors who are not associated with the sponsorCorrect
  2. BAll directors must be nominees of the sponsor
  3. CAt least 75% of directors must be associates of the sponsor
  4. DThe board must have no independent directors, to avoid conflicts

Explanation

The regulations require that at least 50% of the AMC's directors are not associated with the sponsor or its subsidiaries in any manner. This keeps the board independent of sponsor interest and protects unit holders. The other options contradict this safeguard.

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