What is Registration of Mutual Fund with SEBI?

 A mutual fund is set up in the form of a trust, which has sponsor,

trustees, Asset Management Company (AMC) and custodian. The trust is
established by a sponsor or more than one sponsor who is like promoter of
a company. The trustees of the mutual fund hold its property for the benefit
of the unit holders.
 Asset Management Company (AMC) approved by SEBI manages the
funds by making investments in various types of securities. Custodian, who
is registered with SEBI, holds the securities of various schemes of the fund
in its custody. The trustees are vested with the general power of
superintendence and direction over AMC. They monitor the performance
and compliance of SEBI Regulations by the mutual fund.
 An applicant proposing to sponsor a mutual fund (MF) in India must
submit an application in Form A [first schedule of the SEBI (Mutual Funds)
Regulations, 1996 (hereinafter, referred to as the Regulations)] along with a
non-refundable fee of INR 5 lakh.
 The application is examined and once the sponsor satisfies the
eligibility criteria, it is required to complete the remaining formalities for
setting up a MF. These include inter alia, executing the trust deed and
investment management agreement, setting up a trustee company/board of
trustees comprising two-thirds independent trustees, incorporating the
 asset management company (AMC), contributing to at least 40% of the net
worth of the AMC and appointing a custodian. Upon satisfying these
conditions, the registration certificate is issued subject to the payment of
registration fees of INR 25 lakh.

Procedure for registering a mutual fund with SEBI

An application for registration of a mutual fund shall be made to the Board
(SEBI) in Form Aby the sponsor along with the non-refundable fee of INR 5
lakh.

Eligibility criteria

The applicant has to fulfil the following criteria for grant of a

certificate of registration:

The sponsor should have a sound track record and general reputation
of fairness andintegrity in all his business transactions.

Explanation: For the purposes of this clause "sound track record"

shall mean thesponsor should

 Be carrying on business in financial services for a period of not less

than 5 years; and
 The net worth is positive in all the immediately preceding 5 years;
and
 The net worth in the immediately preceding year is more than the
capitalcontribution of the sponsor in the asset management company; and
 The sponsor has profits after providing for depreciation, interest and
tax in 3 out of the immediately preceding 5 years, including the 5 year.
 The applicant is a fit and proper person.
 In the case of an existing mutual fund, such fund is in the form of a
trust and thetrust deed has been approved by the SEBI;

The sponsor has contributed or contributes at least 40% to the net

worth of the asset management company,

Provided that any person who holds 40% or more of the net worth of an
assetmanagement company shall be deemed to be a sponsor and will be
required to fulfil the eligibility criteria specified in these regulations;

 The sponsor or any of its directors or the principle officer to be

employed by the mutual fund should not have been guilty of fraud or has
not been convicted of an offence involving moral turpitude or has not been
found guilty of any economic offence;
 Appointment of trustees to act as trustees for the mutual fund in
accordance with the provisions of the regulations;
 Appointment of Asset Management Company to manage the mutual
fund and operate the scheme of such funds in accordance with the
provisions of these regulations;
 Appointment of custodian in order to keep custody of the securities or
gold and gold related instrument or other assets of the mutual fund held in
terms of these regulations, and provide such other custodial services as
may be authorised by the trustees

SEBI may register the mutual fund on receipt of all the information and
accordingly decide to grant acertificate of registration in Form B subject to
the payment of registration fees of INR 25 lakh.

A mutual fund shall pay before the 15th April each year an annual fee as
specified under for every financial year from the year following the year of
registration
Average Assets under Management (AAUM)
Annual Fee
as on 31 March
AAUM up to INR 10,000 crore 0.0015% of the AAUM
0.0010% of the portion of AAUM in excess
Part of AAUM above INR 10, 000 crore
of INR 10,000 crore

Subject to a minimum of INR 2, 50,000 and a Maximum of INR 1, 00,

00,000.

Where the sponsor does not satisfy the eligibility criteria SEBI may reject
the application and inform the applicant of the same.