ASSET MANAGEMENT COMPANY

A

abhishreshthaa

Abhijeet S
What is an Asset Management Company (AMC )?

  • An AMC is an organized form of a “money portfolio manager”.

  • An AMC may have several MF schemes with similar or varied investment objectives.

  • The AMC hires professional money manager who buys and sells securities in line with the funds stated objective by analyzing economic and market trends.


Functions of an AMC ?


  • The AMC of a mutual fund must have net worth of at least 10 crores at all times.


    Directors of the AMC, both independent and non-independent, should have adequate professional experience and should be individuals of moral standing, a condition also applicable to other key personnel of the AMC.


    The AMC cannot act as a trustee of another MF.


    The AMC may undertake specified activities such as advisory services and financial consulting.


    The AMC must always act in the interest of the unit holders and report to the trustees with respect to its activities.


The Fund SPONSOR

  • Sponsor is defined under SEBI regulations as any person who, acting alone or in combination with another body corporate, establishes a mutual fund.

  • The sponsor of a fund is akin to the promoter of a company as he gets the fund registered with SEBI.

  • The sponsor will from a trust and appoint a board of trustees.

SPONSOR COMPANY

  • Generally appoints A.M.C and custodian

  • Must contribute at least 40% of the net worth of the A.M.C

  • Should generally possess a sound financial track record over 5 years prior to registration

Board of trusties

A body of individuals or a trust company –a corporate body complied with the companies Act -1956 and Indian trust Act


Rights

  • Appoint the A.M.C

  • Approve each of the schemes of the A.M.C

  • Right to request any necessary information from the A.M.C regarding operations & conduct

  • Right to ensure any shortfall in the net worth is made up by the A.M.C

  • Right to take remedial actions if the conduct of funds business is not in accordance with SEBI regulations


Obligations of board of trusties

  • Compliance with SEBI regulations 1996 regarding agreement with A.M.C.

  • Ensure funds transactions are in accordance with trust deed.

  • Sharing the responsibility with A.M.C in appointment of fund managers, compliance officers, auditors and registers

  • Ensure due diligence for empanelment of brokers

  • Ensure the interests of unit holders of one scheme are not compromised with those of other schemes

  • Submission of half yearly report of funds activities and a certificate stating that A.M.C is managing the schemes independently of other activities


Bankers

  • Buying & selling of units

  • Paying for investments

  • Receipts from sale of investments

  • Operating and other expenses



Transfer agents

  • Issuing & redeeming units of mutual fund

  • Preparation of transfer documents

  • Updating investor records

Rights of investors

  • Entitled to receive dividends in 30 days

  • Redemption proceeds to br received in 10 days

  • Right claim dividend/redemption proceeds up to 3 yrs

  • Allotment of units within 30 days after IPO

  • Half yearly results and portfolio’s at least in 6 mts.

  • Information bearing material impact

  • Right to information of change in fundamental attributes

  • Right to inspect documents

Limitations to right of investors

  • Investors cannot sue the trust as they are not distinct from it

  • Can lodge complaints against the trust or AMC

  • Have to fully bear the risk associated with the schemes

  • Cannot expect to be compensated for underperformance of schemes
 
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