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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Legal and Regulatory Framework

Which statement about the sponsor of a mutual fund is consistent with the SEBI (Mutual Funds) Regulations?

The sponsor must have a sound track record and a reputation for fairness and integrity in business dealings, along with meeting the required contribution to the AMC's net worth. Portfolio management is done by the AMC, not the sponsor.

  1. AThe sponsor must have a sound track record and general reputation of fairness and integrity in business transactionsCorrect
  2. BThe sponsor is not required to contribute to the net worth of the AMC
  3. CThe sponsor directly manages the schemes' investment portfolio
  4. DThe sponsor must hold at least 51% of the units of every scheme

Explanation

Eligibility criteria include a sound track record, reputation for fairness and integrity, and a stipulated contribution to the AMC's net worth. The sponsor does not run portfolios; the AMC does. There is no rule requiring sponsors to hold a majority of units.

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