Role of sponsor, Financial Management

Role of Sponsor

In the establishment of mutual fund trust, the main role is played by the sponsors. Both the trustees and the fund managers or the asset management company have to be located and appointed by the sponsor. Alternatively, the sponsor has to appoint Board of Trustees and incorporate an asset management company. It has to submit to Securities Exchange Board of India (SEBI) the drafts of the Trust Deed for creation of mutual fund trust with particulars of the persons consenting to be the Trustees both from the sponsor company and the outsiders. It has also to submit draft Memorandum and Articles of Association of Asset Management Company to SEBI with particulars of Directors, i.e., the persons to be appointed from the sponsors' Board and those to be taken from outside. It has also to suggest the name and particulars of the custodians to be engaged for the mutual fund. Once the mutual fund trust is authorized by SEBI, the role of sponsor diminishes as it is the Trust that will interact with SEBI.

Mutual Fund Trust or Trustee

Mutual Fund Trust is created by the sponsors under the Indian Trust Act, 1882 which is the main body in the creation of Mutual Fund Trust.

The main functions of Mutual Fund Trust are as follows:

  • Planning and formulating mutual fund schemes.
  • Seeking SEBI's approval and authorization to these schemes.
  • Marketing the schemes for public subscription.
  • Seeking RBI approval in case NRIs' subscription to mutual fund is invited.
  • Attending to trusteeship functions. This function as per guidelines can be assigned to separately established trust companies too.

In the absence of such companies, existing debenture trustees, banks and financial institutions may be contracted to act as mutual fund trustees with the approval of SEBI. Alternatively, a separate Board of Trustees consisting of individuals of sufficient repute and experience may act as mutual fund trustees. Two third of the trustees shall be independent persons and shall not be associated with the sponsors or be associated with them in any manner whatsoever. The trust company, companies as aforesaid or the Board of trustees including the eligibility of each member shall be intimated to SEBI as per the Guidelines.

Each trustee shall file the details of his transactions of dealing in securities with Mutual Fund on a quarterly basis. Trustees are also required to submit an annual report to the investors in the fund.

 

Posted Date: 9/11/2012 1:18:07 AM | Location : United States







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