Description
MUTUAL FUNDS structure and it contains topics like legal structure of mutual fund, role of different operating bodies, fund managers and scheme takeovers
?LEGAL STRUCTURE ?ROLE OF DIFFERENT OPERATING BODIES ?FUND MERGERS AND SCHEME TAKEOVERS
?IN INDIA ?ISSUE OF OPEN AND CLOSE END FUNDS IN SAME LEGAL STRUCTURE ?FOLLOW THE SEBI REGULATION ?TRUST STRUCTURE ?SPONSOR: ESTABLISHES THE MUTUAL FUND ?Must contribute 40% of the net worth of the AMC ?Need to have sound financial track record ?Appoint trustees
The Sponsor
?Appoints the asset management company. ?Sometimes, this power is given by the sponsor to the trustees through the trust deed. ?At least 50% of directors on the board of asset management company should be independent of the sponsor. ?Asset management company shall not deal with any broker/firm associated with sponsor beyond 5% of daily gross business of the MF. ?All security transactions of the asset management company with its associates should be disclosed.
? TRUSTEES: Manage the Mutual Fund and look after the operations of the appointed AMC. ? The investments are held by the Trustee (fiduciary capacity). ? The beneficiaries from the assets are the unit holders. ? The trustees have a fiduciary responsibility. ? Trustees approve each MF scheme floated by AMC. ? Trustees receive fees for their services. ? Trusts are formed through “Trust Deed” ? “Furnish report to SEBI on half yearly basis on AMC and Fund functioning” ? AMC: acts as investment manager of the trust under the board supervision and direction of the trustees ? “Submit report to AMC on quarterly basis, mentioning activity and compliance factor.
? AMC: Acts as investment manager of the trust under the board supervision and direction of the trustees. ? AMC is the fund manager ? AMC floats the different MF schemes.
? AMC is responsible to the trustees.
? AMC fees have a ceiling decided by SEBI ? Initial issue expenses not exceeding 6%
? Recurring expenses such as trustee fees, audit fees, etc.
? When net assets do no exceed Rs.100 crores, asset management fee is maximum 1.25% of average weekly net assets. ? When assets exceed Rs.100 crores, an additional asset management fee of maximum 1% of additional net assets. ? If the scheme is a no-load scheme, further fee of maximum 1% of average weekly net assets.
?For no-load schemes ?Redemption during the first four years after purchase ? First year maximum 4% ? Second year maximum 3% ? Third year maximum 2% ? Fourth year maximum 1%
?Excepting initial and redemption expenses, the total of all other expenses should be a maximum of ? ? ? ? ? ? ? Average weekly net assets (Rs.Crores) 0-100 next 300 next 300 balance Fees as % of average weekly net assets 2.5% 2.25% 2.0% 1.75%
? CUSTODIAN:
? APPOINTED BY BOARD OF TRUSTEES FOR SAFEKEEPING OF SECURITIES. ? IT’S AN ENTITY INDEPENDENT OF SPONSORS
?BANKERS ?TRANSFER AGENTS
? ISSUE AND REDEEM OF UNITS AND OTHER RELATED SERVICE
?DISTRIBUTORS
? APPOINTED BY AMC ? MAY ACT ON BEHALF OF DIFFERENT FUNDS ? AGENTS - AS INDIVIDUAL
?CONSTITUTION CAN CHANGE IN MANY POSSIBLE WAYS
?AMC TAKEN OVER BY ANOTHER SPONSOR ?MERGER OF TWO AMCs ?DECISION OF TRUSTEE TO CHANGE AMC ?CHANGE OF TRUSTEES ?MERGER OF TWO SCHEMES WITH SAME AMC/TRUSTEES
?MERGER OF TWO AMCs
? NEEDS TO FOLLOW INDIAN CO. ACT ? SEBI APPROVAL REQUIRED ? CONSENT OF UNIT HOLDERS WITH 75% VOTING RIGHTS
?AMC TAKEOVER BY NEW SPONSORS
? HIGH COUT APPROVAL NOT REQUIRED BUT SEBI CLEARANCE REQUIRED
?SCHEME TAKE OVER
? AMC CANNOT WITHDRAW OR TRANSFER THE MANAGEMENT OF SCHEME TO ANOTHER AMC WITHOUT UNIT HOLDERS CONSENT ? TRUSTEES CANNOT EFFECT AMC WITHOUT UNITHOLDERS CONSENT “ANY AMENDMENTS IN SCHEME, REQUIRE CONSENT OF UNIT HOLDERS IN CASE OF ONLY CLOSE END FUND. OPEN END FUND NEEDS TO JUST INFORM Unitholders.”
?SEBI
? SEBI regulates MFs ? All MFs have to be registered with SEBI
?RBI
? Bank-owned MFs are under RBI and SEBI
?Ownership of AMC by the bank ?Guarantees issued by the bank as sponsor ?Fund mergers of bank-sponsored MFs
? Permission to access inter-bank call money market
?Ministry of Finance ?Company Law Board
? Department of Company Affairs
?Registrar of Companies ?Stock Exchanges ?Charity Commissioner
? Office of the public trustee
?Board of trustees of MFs
?An organization specially empowered to regulate activities of its members ?AMFI is not a self-regulatory organization
mutual funds and unitholders ?Set ethical, commercial, and professional standards in the industry ?Increase the public
Investors Rights and Obligations
? ? ? ? ? ?
Right of Proportionate “beneficial Ownership” Right to Timely Service Right to Information Right to Approve changes in Fundamental Attributes Right to Wind Up a Scheme Right to Terminate the AMC
Legal Limitations to Investors Rights
?Investors cannot Sue the Trust. ?Investors can initiate legal proceedings against the trustees ?Sponsors of a MF have no obligation to meet the shortfall in non- assured schemes ?Only if the OD has specifically provided such guarantee by a named sponsor the investors have a right to sue the sponsors ?Prospective Investors cannot sue the Trust / the AMC or any other constituent.
Investors Obligations / Complaint Redressal
?SEBI intervention Investors should: ?For issue of due diligence ?Read Offer Document certificate for new scheme ?Understand Risk factors by compliance officer ?Monitor Investments ?Companies Act cannot ?Ask for information required protect investors as fund investors are neither “Monitoring is entirely his/ shareholders in the AMC her own responsibility” nor depositors
doc_771089291.ppt
MUTUAL FUNDS structure and it contains topics like legal structure of mutual fund, role of different operating bodies, fund managers and scheme takeovers
?LEGAL STRUCTURE ?ROLE OF DIFFERENT OPERATING BODIES ?FUND MERGERS AND SCHEME TAKEOVERS
?IN INDIA ?ISSUE OF OPEN AND CLOSE END FUNDS IN SAME LEGAL STRUCTURE ?FOLLOW THE SEBI REGULATION ?TRUST STRUCTURE ?SPONSOR: ESTABLISHES THE MUTUAL FUND ?Must contribute 40% of the net worth of the AMC ?Need to have sound financial track record ?Appoint trustees
The Sponsor
?Appoints the asset management company. ?Sometimes, this power is given by the sponsor to the trustees through the trust deed. ?At least 50% of directors on the board of asset management company should be independent of the sponsor. ?Asset management company shall not deal with any broker/firm associated with sponsor beyond 5% of daily gross business of the MF. ?All security transactions of the asset management company with its associates should be disclosed.
? TRUSTEES: Manage the Mutual Fund and look after the operations of the appointed AMC. ? The investments are held by the Trustee (fiduciary capacity). ? The beneficiaries from the assets are the unit holders. ? The trustees have a fiduciary responsibility. ? Trustees approve each MF scheme floated by AMC. ? Trustees receive fees for their services. ? Trusts are formed through “Trust Deed” ? “Furnish report to SEBI on half yearly basis on AMC and Fund functioning” ? AMC: acts as investment manager of the trust under the board supervision and direction of the trustees ? “Submit report to AMC on quarterly basis, mentioning activity and compliance factor.
? AMC: Acts as investment manager of the trust under the board supervision and direction of the trustees. ? AMC is the fund manager ? AMC floats the different MF schemes.
? AMC is responsible to the trustees.
? AMC fees have a ceiling decided by SEBI ? Initial issue expenses not exceeding 6%
? Recurring expenses such as trustee fees, audit fees, etc.
? When net assets do no exceed Rs.100 crores, asset management fee is maximum 1.25% of average weekly net assets. ? When assets exceed Rs.100 crores, an additional asset management fee of maximum 1% of additional net assets. ? If the scheme is a no-load scheme, further fee of maximum 1% of average weekly net assets.
?For no-load schemes ?Redemption during the first four years after purchase ? First year maximum 4% ? Second year maximum 3% ? Third year maximum 2% ? Fourth year maximum 1%
?Excepting initial and redemption expenses, the total of all other expenses should be a maximum of ? ? ? ? ? ? ? Average weekly net assets (Rs.Crores) 0-100 next 300 next 300 balance Fees as % of average weekly net assets 2.5% 2.25% 2.0% 1.75%
? CUSTODIAN:
? APPOINTED BY BOARD OF TRUSTEES FOR SAFEKEEPING OF SECURITIES. ? IT’S AN ENTITY INDEPENDENT OF SPONSORS
?BANKERS ?TRANSFER AGENTS
? ISSUE AND REDEEM OF UNITS AND OTHER RELATED SERVICE
?DISTRIBUTORS
? APPOINTED BY AMC ? MAY ACT ON BEHALF OF DIFFERENT FUNDS ? AGENTS - AS INDIVIDUAL
?CONSTITUTION CAN CHANGE IN MANY POSSIBLE WAYS
?AMC TAKEN OVER BY ANOTHER SPONSOR ?MERGER OF TWO AMCs ?DECISION OF TRUSTEE TO CHANGE AMC ?CHANGE OF TRUSTEES ?MERGER OF TWO SCHEMES WITH SAME AMC/TRUSTEES
?MERGER OF TWO AMCs
? NEEDS TO FOLLOW INDIAN CO. ACT ? SEBI APPROVAL REQUIRED ? CONSENT OF UNIT HOLDERS WITH 75% VOTING RIGHTS
?AMC TAKEOVER BY NEW SPONSORS
? HIGH COUT APPROVAL NOT REQUIRED BUT SEBI CLEARANCE REQUIRED
?SCHEME TAKE OVER
? AMC CANNOT WITHDRAW OR TRANSFER THE MANAGEMENT OF SCHEME TO ANOTHER AMC WITHOUT UNIT HOLDERS CONSENT ? TRUSTEES CANNOT EFFECT AMC WITHOUT UNITHOLDERS CONSENT “ANY AMENDMENTS IN SCHEME, REQUIRE CONSENT OF UNIT HOLDERS IN CASE OF ONLY CLOSE END FUND. OPEN END FUND NEEDS TO JUST INFORM Unitholders.”
?SEBI
? SEBI regulates MFs ? All MFs have to be registered with SEBI
?RBI
? Bank-owned MFs are under RBI and SEBI
?Ownership of AMC by the bank ?Guarantees issued by the bank as sponsor ?Fund mergers of bank-sponsored MFs
? Permission to access inter-bank call money market
?Ministry of Finance ?Company Law Board
? Department of Company Affairs
?Registrar of Companies ?Stock Exchanges ?Charity Commissioner
? Office of the public trustee
?Board of trustees of MFs
?An organization specially empowered to regulate activities of its members ?AMFI is not a self-regulatory organization
mutual funds and unitholders ?Set ethical, commercial, and professional standards in the industry ?Increase the public
Investors Rights and Obligations
? ? ? ? ? ?
Right of Proportionate “beneficial Ownership” Right to Timely Service Right to Information Right to Approve changes in Fundamental Attributes Right to Wind Up a Scheme Right to Terminate the AMC
Legal Limitations to Investors Rights
?Investors cannot Sue the Trust. ?Investors can initiate legal proceedings against the trustees ?Sponsors of a MF have no obligation to meet the shortfall in non- assured schemes ?Only if the OD has specifically provided such guarantee by a named sponsor the investors have a right to sue the sponsors ?Prospective Investors cannot sue the Trust / the AMC or any other constituent.
Investors Obligations / Complaint Redressal
?SEBI intervention Investors should: ?For issue of due diligence ?Read Offer Document certificate for new scheme ?Understand Risk factors by compliance officer ?Monitor Investments ?Companies Act cannot ?Ask for information required protect investors as fund investors are neither “Monitoring is entirely his/ shareholders in the AMC her own responsibility” nor depositors
doc_771089291.ppt