Mutual Funds Case Study

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Guidelines by the Government The Government of India has come out with comprehensive guidelines governing the formation and operations of all mutual funds and the SEBI has been vested with wide ranging statutory powers to oversee the constitution and working of mutual funds. These guidelines are: 1. All mutual funds shall be authorized for business by the SEBI and operated only by separate asset management companies. 2. Mutual funds can invest only in transferable security in the money and capital markets or any privately placed debentures or securitized debts. 3. Note more than 5 percent can be invested in the corpus of any company‟s shares and investments under a single scheme. This has now been raised to 10 percent. 4. Investment under…show more content…
5 crores; of which the minimum contribution of the sponsor should be 40%. 6. The mutual funds should have a custodian, not associated in any way with the asset management company and registered with the Board. 7. The minimum amount to be raised with each close ended scheme should be Rs. 20 crores and for the open scheme Rs. 50 crores. 209 8. Mutual funds will have to maintain books of accounts, expenses, and make appropriation of expenses among the individual schemes, fix limit of expenses of the AMC that can be charged to the mutual funds, provide for depreciation and bad debts. 9. Mutual funds have to publish scheme wise annual reports, furnish annual statement of accounts, furnish six monthly unaudited accounts, quarterly statements of movements and net asset value and quarterly portfolio statements to SEBI. 10. Mutual funds should ensure adequate disclosures to the investors. The SEBI also restricted mutual funds from making assurance or claims that could mislead the public. 11. In case of violations of the provisions of the SEBI Act, 1992 or the regulation, SEBI can withdraw authorization to any AMC. 12. Mutual funds…show more content…
Mutual funds shall be authorized for business by the SEBI. 2. Mutual funds shall be sponsored by the registered companies with sound track, general reputation and fairness in all their business transactions. 3. Mutual funds shall be established in the form of trusts under Indian Trusts Act. The sponsoring institution will be free to work out the details regarding the constitution of the trust. 4. The trust shall be authorized to float one or several different schemes under which units shall be issued to the investors. 5. Mutual funds shall be operated by separately established Asset Management Companies (AMC) to be approved by the SEBI. 6. AMC cannot act as the Trustee of Unit Trusts. 7. AMC cannot undertake any other business activity than management of mutal funds and such other activities as financial services constantly, exchange of research and analysis on commercial basis as long as these are not in conflict with the management activity itself. 8. The mutual funds shall use the services of a custodian registered with the SEBI. 9. The custodian shall be totally delinked from the AMC. 10. Each authorized mutual funds shall be allowed to float different schemes as long as the AMC concerned meets the required capital adequacy

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