Skip to main content

Mutual Funds Structure

Fund Structure of Mutual Funds

1. Fund Sponsor

  • Any person or corporate body that establishes the fund and registers it with SEBI.
  • Forms a trust and appoints a Board of Trustees.
  • Appoints the Custodian and Asset Management Company (AMC) directly or through the trust as per SEBI regulations.
  • SEBI regulations require the sponsor to contribute at least 40% of the net worth of the AMC.

2. Trustees

  • Created through a legal document called the Trust Deed, executed by the Fund Sponsor and registered with SEBI.

  • The mutual fund may be managed by a Board of Trustees, a Trustee Company, or a Corporate Body.

  • Act as protectors of unit holders' interests.

  • At least 2/3 of the trustees must be independent and not associated with the sponsor.

    Rights of Trustees

    • Approve each scheme launched by the AMC.
    • Request necessary information from the AMC.
    • Take corrective action if the fund business is not conducted as per SEBI regulations.
    • Dismiss the AMC if required.
    • Ensure that the AMC maintains the required net worth.

    Obligations of Trustees

    • Enter into an Investment Management Agreement with the AMC.
    • Furnish half-yearly reports to SEBI about fund activities.
    • Ensure no fundamental changes occur in the scheme without informing unit holders.
    • Review investor complaints and ensure proper redressal by the AMC.

3. Asset Management Company (AMC)

  • Acts as the principal manager of the fund under the supervision of the Trustees.

  • Must be approved and registered with SEBI.

  • Manages and launches different investment schemes under the trust’s name as per SEBI regulations.

  • Acts as a fiduciary for unit holders and reports to the trustees.

  • At least 50% of AMC board members must be independent.

    Obligations of the AMC

    • Launch investment schemes only after SEBI and Trustee approval.
    • Send quarterly reports to trustees.
    • Provide disclosures to investors, including NAV and repurchase price.
    • Maintain a minimum net worth of ₹10 crore.
    • Avoid transactions through brokers exceeding 5% of total transactions.
    • AMC cannot act as a trustee for any other mutual fund.
    • Must not undertake any conflicting business activities.

4. Custodian

  • Responsible for the physical handling and safekeeping of securities.
  • Must be independent of the sponsor and registered with SEBI.

5. Depository

  • Holds dematerialized securities of the mutual fund.
  • As Indian capital markets move away from physical certificates, securities are stored electronically.

6. Agents & Distributors

  • Agents help sell mutual fund units to investors.
  • Distributors act as intermediaries between the AMC and investors.
Back to top