NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Legal Structure of Mutual Funds in India
Which statement about the Board of Directors of an Asset Management Company (AMC) under SEBI Mutual Fund Regulations is correct?
At least 50% of the directors of an AMC must not be associates of, or associated with, the sponsor or its subsidiaries. This independence requirement prevents the board from being wholly controlled by the sponsor group.
- AAll directors may be associates of the sponsor
- BAt least 50% of the directors must not be associates of, or associated with, the sponsor or any of its subsidiariesCorrect
- CThe AMC board has no independent directors
- DTrustees must be on the AMC board
Explanation
Regulations require that at least 50% of the AMC's directors are not associates of the sponsor or its group entities, which ensures independence. Therefore an all-associate board is not permitted. Trustees and AMC directors are separate bodies and the board cannot lack independent members.
Did you get it right without looking?
One question tells you little. A timed set on Legal Structure of Mutual Funds in India shows your real accuracy, how long you take and where you lose marks.
More Legal Structure of Mutual Funds in India questions
- Which of the following is a requirement that an applicant must satisfy to be eligible to act as a sponsor of a mutual fund under the SEBI (M…
- A mutual fund AMC has a board of 9 directors. Under SEBI regulations, what is the minimum number of directors who must be independent, i.e. …
- Which entity is responsible for safekeeping the securities of a mutual fund scheme and delivering them on settlement of trades?
- In the three-tier structure of a mutual fund in India, which entity holds the trust property for the benefit of the unitholders?
- Which of the following is a condition that a sponsor must satisfy under SEBI Mutual Fund Regulations to set up a mutual fund?
- Which of the following is the primary function of the custodian of a mutual fund in India?