Chapter 3 — All 80 Questions
Q1EasyRole and responsibilities of Trustees
What is the primary and overarching duty of the Board of Trustees of a mutual fund?
ATo manage the investment portfolio of the mutual fund schemes.
✓To ensure that the Asset Management Company (AMC) acts in the best interest of the unitholders.
CTo distribute mutual fund units to investors.
DTo provide custodian services for the fund's securities.
💡 The Board of Trustees of a mutual fund acts as a fiduciary for the unitholders and has the primary duty to ensure that the Asset Management Company (AMC) manages the fund's affairs and operates the schemes in the best interest of the unitholders, as per SEBI (Mutual Funds) Regulations, 1996.
Q2EasySponsor's Role and Responsibilities
As per SEBI (Mutual Funds) Regulations, 1996, which entity is primarily responsible for ensuring that the Asset Management Company (AMC) has adequate infrastructure and personnel to manage the mutual fund's operations?
AThe Board of Trustees
✓The Sponsor
CThe Custodian
DThe Registrar and Transfer Agent
💡 The Sponsor is the entity that establishes the mutual fund and promotes the Asset Management Company (AMC). It is the Sponsor's primary responsibility to ensure that the AMC it promotes is capable of managing the fund, including having adequate infrastructure, financial strength, and experienced personnel, as stipulated in SEBI (Mutual Funds) Regulations, 1996.
Q3MediumAsset Management Company (AMC) requirements
What is the minimum net worth an Asset Management Company (AMC) must maintain at all times as per SEBI (Mutual Funds) Regulations, 1996?
A₹10 crore
B₹25 crore
✓₹50 crore
D₹100 crore
💡 As per SEBI (Mutual Funds) Regulations, 1996, an Asset Management Company (AMC) is required to have a minimum net worth of ₹50 crore at all times. This requirement was revised upwards from an earlier ₹10 crore.
Q4MediumTrustee independence and responsibilities
Which of the following statements regarding the independence requirements for the Board of Trustees or Trustee Company of a mutual fund is FALSE?
✓At least fifty percent of the trustees must be independent persons, not associated with the sponsor or AMC.
BAn independent trustee cannot hold any office or position in the Asset Management Company of the same mutual fund.
CThe sponsor appoints the trustees with the prior approval of SEBI.
DThe trustees are ultimately responsible for safeguarding the interests of the unitholders.
💡 As per SEBI (Mutual Funds) Regulations, 1996, at least two-thirds (and not fifty percent) of the directors on the board of the trustee company or individual trustees must be independent persons and not associated with the sponsor or the asset management company.
Q5EasyBoard of Trustees Composition and Independence
What is the minimum proportion of independent trustees required on the Board of Trustees of a mutual fund?
AOne-third
BHalf
✓Two-thirds
DThree-fourths
💡 As per SEBI (Mutual Funds) Regulations, 1996, Regulation 16(2), at least two-thirds of the trustees on the board of trustees must be independent trustees. An independent trustee is defined as one who is not associated with the sponsor or the Asset Management Company (AMC).
Q6HardRole and Responsibilities of Asset Management Company (AMC)
According to SEBI (Mutual Funds) Regulations, 1996, what is the minimum net worth requirement for an Asset Management Company (AMC) at all times?
AINR 25 crore
✓INR 50 crore
CINR 100 crore
DINR 150 crore
💡 SEBI (Mutual Funds) Regulations, 1996, stipulate that an Asset Management Company (AMC) must have a minimum net worth of INR 50 crore at all times. This ensures the AMC's financial soundness and capacity to manage the fund.
Q7EasyRoles and responsibilities of mutual fund entities
In the legal structure of a mutual fund in India, who is primarily responsible for appointing the Asset Management Company (AMC)?
AThe Sponsor
BThe Custodian
✓The Board of Trustees
DSEBI
💡 The Board of Trustees (or Trustee Company) holds the assets for the benefit of the unitholders and is responsible for appointing the Asset Management Company (AMC) to manage the fund's investments, subject to SEBI approval. This is a core function of the Trustees.
Q8EasySponsor's Eligibility Criteria
As per SEBI (Mutual Funds) Regulations, 1996, what is one of the key eligibility criteria for an entity to act as a sponsor of a mutual fund, in addition to prescribed net worth requirements?
AThe sponsor must have at least 5 years of experience in the financial services industry.
BThe sponsor must have a positive net worth for the immediately preceding three years.
✓The sponsor must have profits in at least three out of the immediately preceding five years, including the immediately preceding year.
DThe sponsor must commit to investing at least 10% of the total corpus of each new scheme launched.
💡 As per SEBI (Mutual Funds) Regulations, 1996, a sponsor must have profits in at least three out of the immediately preceding five years, including the immediately preceding year, to be eligible to sponsor a mutual fund. This ensures financial soundness and a track record of profitability.
Q9MediumTrustee Board Composition and Independence
Which of the following statements is TRUE regarding the composition of the Board of Trustees of a mutual fund?
AAll Trustees must be employees of the Sponsor.
✓At least two-thirds of the Trustees must be independent persons and not associates of the Sponsor.
CThe Chairman of the Board of Trustees must also be the Chairman of the AMC's Board.
DThe Sponsor has the sole authority to appoint and remove all Trustees without SEBI's approval.
💡 As per SEBI (Mutual Funds) Regulations, 1996, to ensure independence and safeguard unitholder interests, at least two-thirds of the Trustees of a mutual fund must be independent persons and not associated in any manner with the Sponsor, the AMC, or any of their subsidiaries.
Q10MediumTrustees and their composition
What is the minimum proportion of independent directors required on the Board of Trustees of a mutual fund as per SEBI regulations?
AAt least one-third of the total trustees
BAt least half of the total trustees
✓At least two-thirds of the total trustees
DAll trustees must be independent
💡 SEBI (Mutual Funds) Regulations, 1996, mandate that at least two-thirds of the directors on the Board of Trustees must be independent directors. This ensures that the trustees act independently and in the best interest of the unitholders, providing a check on the AMC.
Q11MediumSponsor's Eligibility Criteria
As per SEBI (Mutual Funds) Regulations, 1996, which of the following is NOT an eligibility criterion for a sponsor seeking to establish a mutual fund in India?
AThe sponsor must have a sound track record and general reputation of fairness and integrity.
BThe sponsor must have a positive net worth in all immediately preceding five years.
CThe sponsor must have a net worth of at least INR 100 crore in each of the immediately preceding five years.
✓The sponsor must have earned profits in at least two out of the immediately preceding five years.
💡 As per SEBI (Mutual Funds) Regulations, 1996, a sponsor must have earned profits in at least three out of the immediately preceding five years, including the fifth year. Options A, B, and C are correct eligibility criteria.
Q12HardAsset Management Company (AMC) board composition
According to SEBI (Mutual Funds) Regulations, 1996, what is the minimum proportion of independent directors required on the board of directors of an Asset Management Company (AMC)?
ANot less than one-third
✓Not less than half
CNot less than two-thirds
DNot less than three-fourths
💡 As per SEBI (Mutual Funds) Regulations, 1996, Chapter VI, Clause 21(1)(b), the board of directors of the Asset Management Company (AMC) shall have not less than half of its directors as independent directors.
Q13HardRole of Custodian and Registrar & Transfer Agent (RTA) and their independence
To ensure independence and proper oversight, which of the following statements regarding the appointment of a Custodian and Registrar & Transfer Agent (RTA) for a mutual fund is most accurate?
ABoth the Custodian and RTA must be appointed by the Asset Management Company (AMC) with the prior approval of the Trustees.
BThe Custodian must be independent of the AMC, whereas the RTA can be a wholly-owned subsidiary of the AMC.
✓Both the Custodian and RTA must be independent of the AMC and appointed with the approval of the Trustees.
DThe Custodian is appointed by the Trustees, and the RTA is appointed by the AMC.
💡 As per SEBI (Mutual Funds) Regulations, 1996, both the Custodian and the Registrar & Transfer Agent (RTA) must be independent of the Asset Management Company (AMC) to maintain checks and balances and prevent conflicts of interest. Their appointments are crucial for the integrity of the fund's operations and therefore require the prior approval of the Trustees.
Q14HardTrust Deed and other legal documents
Which of the following aspects is NOT typically specified in the Trust Deed of a mutual fund?
AThe powers and duties of the Trustees.
BThe procedure for appointment and removal of the Asset Management Company.
✓The specific investment objectives and policies for each scheme launched by the fund.
DThe manner in which the trust property is to be held and administered.
💡 The Trust Deed primarily establishes the mutual fund as a trust, defining the powers, duties, and responsibilities of the Trustees, the appointment/removal of the AMC, and the general administration of the trust property. The specific investment objectives, policies, and other details for *each individual scheme* are detailed in the Scheme Information Document (SID) or Offer Document, which is a scheme-specific disclosure document, not in the foundational Trust Deed.
Q15MediumCustodian's Role and Responsibilities
Beyond the safekeeping of securities and other assets of the mutual fund schemes, which of the following is another critical function of a Custodian as per SEBI (Mutual Funds) Regulations?
ACalculating and declaring the Net Asset Value (NAV) of the schemes.
BEnsuring compliance of the mutual fund with SEBI regulations on an ongoing basis.
✓Providing information to SEBI regarding transactions in securities held by the mutual fund, as required.
DMarketing the schemes to potential investors.
💡 As per SEBI (Mutual Funds) Regulations, 1996, the Custodian is responsible not only for holding the securities and other assets of the schemes but also has a duty to provide information to SEBI regarding transactions in securities held by the mutual fund, as and when required. This is a key regulatory reporting function.
Q16MediumRole of Fund Accountant
Which of the following functions is typically performed by a Fund Accountant, either in-house or outsourced, for a mutual fund?
ADeciding on the investment strategy for various schemes.
✓Calculating and disclosing the Net Asset Value (NAV) of schemes.
CMarketing and distributing mutual fund units to investors.
DHolding the securities and other assets of the schemes in custody.
💡 The Fund Accountant's primary responsibilities include maintaining the books of accounts for the schemes, calculating income and expenses, and ultimately determining the Net Asset Value (NAV) of each scheme on a daily basis. Investment strategy is the AMC's role, marketing is done by distributors/AMC, and custody is handled by the Custodian.
Q17HardLegal Structure and Trust Deed
Which of the following statements regarding the Trust Deed of a mutual fund in India is NOT accurate?
AThe Trust Deed is the foundational document that establishes the mutual fund as a trust.
BAny amendment to the Trust Deed requires prior approval from the Board of Trustees and subsequently from SEBI.
CThe Trust Deed specifies the rights and responsibilities of the Sponsor, Trustees, and the Asset Management Company.
✓The Trust Deed must be registered with the Registrar of Assurances under the Indian Trusts Act, 1882.
💡 While the Indian Trusts Act, 1882, governs the legal framework for trusts in India, the registration of a Trust Deed is done with the Registrar of Assurances under the Indian Registration Act, 1908. Options a, b, and c are accurate statements regarding the Trust Deed's purpose, amendment process (Regulation 26(2)), and content.
Q18MediumAsset Management Company (AMC) / Board Composition
As per SEBI (Mutual Funds) Regulations, 1996, what is the minimum proportion of independent directors required on the Board of Directors of an Asset Management Company (AMC)?
AAt least one-third of the directors.
✓At least half of the directors.
CAt least two-thirds of the directors.
DAll directors must be independent.
💡 Regulation 21(1)(b) of SEBI (Mutual Funds) Regulations, 1996 states that the Board of Directors of the Asset Management Company shall have at least half of the directors as independent directors.
Q19MediumTrustee independence and composition
To ensure effective oversight and safeguard unit holder interests, what is the minimum proportion of independent trustees required on the Board of Trustees of a mutual fund?
AAt least one-third of the trustees must be independent.
BAt least half of the trustees must be independent.
✓At least two-thirds of the trustees must be independent.
DAll trustees must be independent.
💡 As per SEBI (Mutual Funds) Regulations, 1996, at least two-thirds of the trustees on the Board of Trustees must be independent persons and not associated with the sponsor or the Asset Management Company (AMC). This ensures that the trustees can act impartially and in the best interest of the unit holders.
Q20EasyTrustee Board Composition
As per SEBI (Mutual Funds) Regulations, 1996, what is the minimum proportion of independent trustees required on the Board of Trustees of a mutual fund?
AAt least one-third of the total number of trustees.
BAt least fifty percent of the total number of trustees.
✓At least two-thirds of the total number of trustees.
DAt least seventy-five percent of the total number of trustees.
💡 Regulation 16(b) of SEBI (Mutual Funds) Regulations, 1996 mandates that at least two-thirds of the trustees shall be independent trustees and shall not be associated in any manner with the sponsor or the asset management company.
Q21MediumRole and responsibilities of Trustees
Which of the following activities requires the prior approval of the Trustees before the Asset Management Company (AMC) can implement it?
ADaily valuation of scheme portfolios.
✓Launch of a new scheme with different investment objectives.
CCalculation of Net Asset Value (NAV).
DAppointment of a new fund manager for an existing scheme.
💡 As per SEBI (Mutual Funds) Regulations, 1996, the Trustees are responsible for overseeing the AMC's operations and acting in the best interest of unitholders. Launching a new scheme or making fundamental changes to an existing scheme's investment objectives requires the prior approval of the Trustees. Daily valuations, NAV calculations, and operational appointments like a fund manager are primarily AMC's responsibilities, though overall oversight remains with the Trustees.
Q22HardKey legal documents - Trust Deed
Which of the following accurately describes the primary function of the 'Trust Deed' in the legal structure of a mutual fund?
AIt details the investment objectives, asset allocation, and risk factors for each specific mutual fund scheme.
BIt outlines the terms and conditions for the appointment of the Registrar and Transfer Agent (RTA) and their service level agreements.
✓It formally establishes the mutual fund as a trust, appoints the Board of Trustees, and vests the fund's assets in them.
DIt specifies the fees and expenses that the Asset Management Company (AMC) can charge to the mutual fund schemes.
💡 The Trust Deed is the foundational legal document that formally establishes the mutual fund as a trust under the Indian Trusts Act, 1882. It appoints the Board of Trustees, vests the ownership of the fund's assets in them, and defines their powers, duties, and responsibilities. The investment objectives are primarily in the Scheme Information Document (SID), RTA terms are in the RTA agreement, and fees are in the SID and Investment Management Agreement (IMA).
Q23MediumSponsor Eligibility Criteria
As per SEBI (Mutual Funds) Regulations, 1996, a sponsor is required to have a sound track record. Which of the following conditions correctly describes a part of this requirement regarding net worth?
AThe sponsor must have a positive net worth for at least three out of the immediately preceding five years.
✓The sponsor must have a positive net worth for all the immediately preceding five years.
CThe sponsor must have a minimum net worth of ₹100 crore for all the immediately preceding five years.
DThe sponsor must have a positive net worth for at least four out of the immediately preceding five years.
💡 As per Regulation 7(b) of SEBI (Mutual Funds) Regulations, 1996, for a sponsor to have a 'sound track record', it must have a positive net worth for all the immediately preceding five years. It also requires the sponsor to have earned profits (after providing for depreciation and interest) in at least three out of the immediately preceding five years, including the fifth year.
Q24EasyLegal Structure of a Mutual Fund
In India, a mutual fund is constituted as a:
ACompany under the Companies Act, 2013.
BBody corporate under a special Act of Parliament.
✓Trust under the Indian Trusts Act, 1882.
DCooperative society under the Cooperative Societies Act.
💡 As per SEBI (Mutual Funds) Regulations, 1996, a mutual fund in India is established as a trust under the Indian Trusts Act, 1882. The sponsor establishes the trust, and the trustees hold the assets for the benefit of the unit holders.
Q25MediumSponsor eligibility criteria
Which of the following is a mandatory eligibility criterion for an entity to be registered as a Sponsor of a mutual fund as per SEBI regulations?
AIt must have a minimum paid-up capital of INR 100 crores.
✓It must have a positive net worth for at least five years, including the immediately preceding year.
CIt must not be engaged in any other financial services business.
DIt must contribute at least 75% of the net worth of the Asset Management Company.
💡 As per SEBI (Mutual Funds) Regulations, 1996, Chapter III, Regulation 7(b), a sponsor must have a positive net worth for at least five years, including the immediately preceding year, among other criteria like a sound track record and profits in at least three of the preceding five years.
Q26MediumRole of Registrar and Transfer Agent (RTA)
Which of the following is the primary responsibility of the Registrar and Transfer Agent (RTA) in the mutual fund structure?
AManaging the investment portfolio of the fund.
BHolding the securities and other assets of the fund.
✓Maintaining investor records and processing transactions like subscriptions and redemptions.
DProviding investment advice to unitholders.
💡 The primary responsibility of the Registrar and Transfer Agent (RTA) is to maintain all investor records, process transactions such as subscriptions, redemptions, switches, and systematic investment/withdrawal plans, and communicate with unitholders (e.g., sending account statements). Investment management is handled by the AMC, asset custody by the Custodian, and investment advice is typically provided by distributors or advisors.
Q27MediumPowers and duties of Trustees
Which of the following is a specific power vested with the Board of Trustees regarding the Asset Management Company (AMC) of a mutual fund?
ATo manage the investment portfolio of the scheme on a day-to-day basis.
BTo approve all marketing materials and advertisements before their publication.
✓To appoint and dismiss the AMC with the approval of SEBI and 75% of the unitholders.
DTo decide the Net Asset Value (NAV) of all schemes daily.
💡 The Board of Trustees has the power to appoint and dismiss the Asset Management Company (AMC), subject to the approval of SEBI and a resolution passed by 75% of the unitholders of the scheme. This ensures checks and balances. The AMC manages the portfolio and calculates NAV, while trustees oversee the AMC.
Q28EasyLegal Structure - Trust Deed
Which legal document primarily establishes the mutual fund as a trust and specifies the powers and duties of the Trustee, the Sponsor, and the AMC?
AInvestment Management Agreement
BCustodian Agreement
✓Trust Deed
DOffer Document
💡 The Trust Deed is the foundational legal document that establishes the mutual fund as a trust. It defines the relationship between the Sponsor and the Trustee and outlines their respective rights, powers, duties, and obligations, as well as the rights of the unitholders.
Q29MediumCustodian Appointment
As per SEBI (Mutual Funds) Regulations, 1996, who is primarily responsible for the appointment of the Custodian for the assets of a mutual fund scheme?
AThe Asset Management Company (AMC).
✓The Board of Trustees of the mutual fund.
CThe Securities and Exchange Board of India (SEBI).
DThe Sponsor of the mutual fund.
💡 Regulation 27(1) of SEBI (Mutual Funds) Regulations, 1996 specifies that 'The custodian shall be appointed by the trustees with the prior approval of the Board (SEBI)'. Therefore, the primary responsibility for the appointment rests with the Board of Trustees.
Q30HardAsset Management Company (AMC) board composition
According to SEBI (Mutual Funds) Regulations, 1996, what is the minimum proportion of independent directors required on the board of directors of an Asset Management Company (AMC)?
AAt least one-third of the directors
✓At least fifty percent of the directors
CAt least two-thirds of the directors
DNo specific requirement, but encouraged by SEBI
💡 SEBI (Mutual Funds) Regulations, 1996, mandate that at least fifty percent of the directors on the board of an Asset Management Company (AMC) must be independent directors, not associated with the sponsor or any of its subsidiaries.
Q31MediumRole and Responsibilities of Sponsor
Which of the following conditions must be continuously fulfilled by a Sponsor of a mutual fund in India, even after the fund has been established?
AMaintaining a minimum net worth of INR 100 crore.
BHaving a sound financial track record of at least five years.
✓Contributing at least 40% to the net worth of the Asset Management Company (AMC).
DGuaranteeing a fixed return on all mutual fund schemes.
💡 As per SEBI (Mutual Funds) Regulations, 1996, the Sponsor must continuously contribute at least 40% to the net worth of the Asset Management Company (AMC). This ensures the Sponsor's continued commitment and financial backing to the AMC.
Q32MediumSponsor eligibility criteria
As per SEBI (Mutual Funds) Regulations, 1996, which of the following is a financial eligibility criterion for an entity to act as a sponsor of a mutual fund?
AThe sponsor must have a positive net worth for at least three out of the immediately preceding five years.
BThe sponsor must have a minimum net worth of INR 500 crore at the time of application.
✓The sponsor must have profits in at least three out of the immediately preceding five years, including the immediately preceding year.
DThe sponsor must hold at least 26% of the share capital of the Asset Management Company (AMC).
💡 SEBI (Mutual Funds) Regulations, 1996, stipulate that a sponsor must have a sound financial track record, which includes having profits in at least three out of the immediately preceding five years, including the immediately preceding year. This ensures the financial stability and credibility of the entity initiating the mutual fund.
Q33HardAsset Management Company (AMC) Board Structure
According to SEBI (Mutual Funds) Regulations, 1996, what is the minimum percentage of independent directors required on the Board of Directors of an Asset Management Company (AMC)?
AAt least one-third
✓At least half
CAt least two-thirds
DAt least three-fourths
💡 Regulation 21(5) of SEBI (Mutual Funds) Regulations, 1996, mandates that the Board of Directors of the Asset Management Company (AMC) shall have not less than half of the directors as independent directors. This is a crucial requirement for governance and investor protection.
Q34MediumTrustees and their composition
What is the minimum proportion of independent trustees required on the Board of Trustees for a mutual fund as per SEBI (Mutual Funds) Regulations, 1996?
AOne-third
BOne-half
✓Two-thirds
DThree-fourths
💡 As per SEBI (Mutual Funds) Regulations, 1996, Chapter III, Regulation 16(b), at least two-thirds of the trustees on the Board of Trustees must be independent persons.
Q35MediumRole and Responsibilities of Trustees
As per SEBI (Mutual Funds) Regulations, 1996, what is a key requirement for the appointment of at least two-thirds of the Trustees of a mutual fund?
AThey must be employees of the Sponsor.
✓They must be independent persons, not associated with the Sponsor.
CThey must have at least 10 years of experience in fund management.
DThey must hold a minimum of 5% stake in the Asset Management Company.
💡 SEBI (Mutual Funds) Regulations, 1996, mandate that at least two-thirds of the trustees must be independent persons, not associated with the sponsor, to ensure unbiased oversight and protect unitholder interests.
Q36MediumCustodian's Role and Independence
Which of the following statements is true regarding the appointment and role of a custodian for a mutual fund in India?
AThe Asset Management Company (AMC) can also act as the custodian for the mutual fund's assets to reduce costs.
BThe custodian must be an associate company of the sponsor to ensure close coordination.
CThe custodian is primarily responsible for maintaining unitholder records and processing transactions.
✓The custodian must be independent of the sponsor and its associates to safeguard assets.
💡 As per SEBI (Mutual Funds) Regulations, 1996 (now 1999), the custodian must be an independent entity, separate from the sponsor and its associates. This independence ensures segregation of duties and provides an additional layer of protection for the mutual fund's assets. Option (a) is incorrect as the AMC cannot be its own custodian. Option (b) contradicts the independence requirement. Option (c) describes the role of the Registrar and Transfer Agent (RTA), not the custodian.
Q37HardTrustees and their Responsibilities / Board Composition
According to SEBI (Mutual Funds) Regulations, 1996, what is the minimum proportion of independent trustees required on the board of trustees of a mutual fund?
AAt least one-third of the trustees.
BAt least half of the trustees.
✓At least two-thirds of the trustees.
DAll trustees must be independent.
💡 Regulation 16(1)(e) of SEBI (Mutual Funds) Regulations, 1996 mandates that at least two-thirds of the trustees shall be independent persons and shall not be associated in any manner with the sponsor or any of its subsidiaries or the asset management company or any other company in the same group.
Q38MediumCustodian's Role and Appointment
Who is primarily responsible for appointing the Custodian for the assets of a mutual fund, and whose prior approval is required for such appointment?
AThe Sponsor, with SEBI's approval.
BThe AMC, with the Board of Trustees' approval.
✓The Board of Trustees, with SEBI's approval.
DThe AMC, with SEBI's approval.
💡 As per SEBI (Mutual Funds) Regulations, 1996, Regulation 26(a), the trustees are responsible for appointing a custodian, with the prior approval of SEBI, to hold the securities and other assets of the mutual fund on behalf of the unitholders.
Q39MediumRole and Independence of Custodian
Which of the following statements about the Custodian of a mutual fund is most accurate?
AThe Custodian must be a subsidiary of the Asset Management Company.
BThe Custodian is responsible for managing the daily investment decisions of the fund.
✓The Custodian must be an entity independent of the Asset Management Company and registered with SEBI.
DThe Custodian's primary role is to market mutual fund schemes to potential investors.
💡 The Custodian is responsible for holding the securities and other assets of the mutual fund. To ensure investor protection and prevent conflict of interest, SEBI regulations mandate that the Custodian must be an entity independent of the Asset Management Company and must be registered with SEBI. Options A, B, and D describe incorrect roles or relationships.
Q40HardAsset Management Company (AMC) Board Composition
According to SEBI (Mutual Funds) Regulations, 1996, what is the minimum proportion of independent directors required on the board of directors of an Asset Management Company (AMC)?
ANot less than one-third of the directors.
✓Not less than half of the directors.
CNot less than two-thirds of the directors.
DExactly half of the directors.
💡 As per SEBI (Mutual Funds) Regulations, 1996, the Asset Management Company (AMC) board must have at least half of its directors as independent directors to ensure proper oversight and investor protection.
Q41EasySponsor eligibility and responsibilities
According to SEBI (Mutual Funds) Regulations, 1996, what is the minimum percentage of the Asset Management Company's (AMC) net worth that the Sponsor is required to contribute?
💡 As per SEBI (Mutual Funds) Regulations, 1996, the sponsor must have a sound track record and contribute at least 40% to the net worth of the Asset Management Company (AMC). This ensures the sponsor's commitment and financial stake in the mutual fund.
Q42HardTrustee Board composition
As per SEBI (Mutual Funds) Regulations, what is the minimum proportion of independent directors required on the Board of Trustees or Board of Directors of a Trustee Company?
AAt least one-third
BAt least half
✓At least two-thirds
DAll directors must be independent
💡 SEBI (Mutual Funds) Regulations, 1996, mandate that at least two-thirds of the directors on the Board of Trustees or the Board of Directors of a Trustee Company must be independent directors. This ensures that the interests of the unitholders are protected by individuals free from potential conflicts of interest.
Q43HardAsset Management Company (AMC) Board Composition
As per SEBI (Mutual Funds) Regulations, 1996, what is the minimum proportion of independent directors required on the Board of Directors of an Asset Management Company (AMC)?
AAt least one-third of the directors.
✓At least half of the directors.
CAt least two-thirds of the directors.
DAt least three-fourths of the directors.
💡 Regulation 21(1)(f) of SEBI (Mutual Funds) Regulations, 1996, mandates that at least half of the directors of the AMC must be independent directors and not associated with the sponsor, or any associate or subsidiary of the sponsor, or any of the directors of the trustee company.
Q44HardRestrictions and responsibilities of AMC
As per SEBI regulations, what is the maximum percentage of its own scheme's units that an Asset Management Company (AMC) can hold in its own books, other than seed capital or investments made to meet regulatory requirements?
AAn AMC cannot hold any units of its own schemes.
✓Up to 5% of the total units of a scheme.
CUp to 10% of the total units of a scheme.
DUp to 25% of the total units of a scheme.
💡 As per SEBI regulations (e.g., SEBI/HO/IMD/DF3/CIR/P/2017/114 dated October 06, 2017, and subsequent clarifications), an Asset Management Company (AMC) is permitted to invest in units of its own schemes (other than seed capital or investment required for meeting regulatory requirements) up to a maximum of 5% of the total units outstanding of that scheme. This is to prevent conflicts of interest and ensure fair valuation.
Q45EasySponsor's Eligibility Criteria
Which of the following is a fundamental eligibility criterion for an entity to act as a Sponsor for a mutual fund in India, as per SEBI (Mutual Funds) Regulations?
AThe Sponsor must have a positive net worth for at least 3 out of the immediately preceding 5 years.
✓The Sponsor must have a sound track record and general reputation of fairness and integrity in all business transactions.
CThe Sponsor must contribute at least 51% of the net worth of the Asset Management Company.
DThe Sponsor must have at least 5 years of experience exclusively in the financial services sector.
💡 As per SEBI (Mutual Funds) Regulations, Regulation 7(a), one of the eligibility criteria for a sponsor is to have a sound track record and general reputation of fairness and integrity in all business transactions. While other criteria like positive net worth for all 5 preceding years and minimum 40% contribution to AMC's net worth exist, option (b) describes a fundamental requirement.
Q46EasyRole of Trustees
What is the primary role of the Board of Trustees or the Trustee Company in the legal structure of a mutual fund?
ATo manage the investment portfolio of the mutual fund schemes.
✓To ensure the mutual fund's operations are in compliance with SEBI regulations and the trust deed, acting in the interest of unitholders.
CTo maintain the books of accounts and records of investor transactions.
DTo provide advisory services to potential investors regarding suitable schemes.
💡 The primary role of the Trustees is to protect the interests of the unitholders. They oversee the AMC's activities to ensure compliance with SEBI Regulations and the provisions of the Trust Deed and Offer Documents. Option A describes the AMC's role, Option C describes the RTA/Fund Accountant's role, and Option D describes a distributor's or advisor's role.
Q47MediumAsset Management Company (AMC) restrictions
Which of the following activities is generally restricted for an Asset Management Company (AMC) under SEBI (Mutual Funds) Regulations, 1996?
AActing as an investment advisor for other mutual funds
BManaging a venture capital fund registered with SEBI
✓Undertaking unrelated financial services like stock broking or insurance agency
DManaging offshore funds for non-resident investors
💡 Regulation 24(c) of the SEBI (Mutual Funds) Regulations, 1996, states that 'The asset management company shall not undertake any activity other than asset management activity.' While managing venture capital funds or offshore funds can be considered part of asset management (often requiring specific permissions or separate entities for VCF), undertaking unrelated financial services like stock broking or insurance agency is generally restricted for the AMC itself to maintain focus on its core mutual fund management business and avoid conflicts of interest.
Q48HardAsset Management Company (AMC) board composition
Which of the following statements is INCORRECT regarding the board of directors of an Asset Management Company (AMC) as per SEBI (Mutual Funds) Regulations, 1996?
AAt least 50% of the directors of the AMC must be independent directors.
BThe Chairman of the AMC's board must be an independent director.
✓The Chief Executive Officer (CEO) of the AMC can also concurrently serve as the Chairman of the AMC's board.
DNo single entity or group, other than the sponsor, can hold more than 10% of the voting rights of the AMC.
💡 As per Regulation 21(1)(e) of SEBI (Mutual Funds) Regulations, 1996, the Chief Executive Officer (CEO) of the Asset Management Company shall not be the Chairman of the AMC's board. The Chairman must be an independent director (Regulation 21(1)(f)). Options A, B, and D are correct statements as per the regulations.
Q49HardAsset Management Company (AMC) - Net Worth
As per SEBI (Mutual Funds) Regulations, 1996, what is the minimum net worth an Asset Management Company (AMC) must maintain at all times?
ARs. 5 crore
✓Rs. 10 crore
CRs. 25 crore
DRs. 50 crore
💡 Regulation 15(2) of SEBI (Mutual Funds) Regulations, 1996, mandates that an Asset Management Company (AMC) must have a minimum net worth of not less than Rs. 10 crore at all times.
Q50MediumTrustee's Independence
To ensure independence and prevent conflicts of interest in a mutual fund, SEBI (Mutual Funds) Regulations, 1996, specifically prohibit a director of the trustee company from also being a director of which other entity?
AThe Registrar and Transfer Agent (RTA)
BThe Custodian
✓The Sponsor Company
DAnother Asset Management Company (AMC)
💡 As per SEBI (Mutual Funds) Regulations, 1996, a director of the trustee company cannot also be a director of the sponsor company or the Asset Management Company (AMC) to ensure the independence of the trustees and prevent potential conflicts of interest.
Q51MediumSponsor's Eligibility Criteria
As per SEBI (Mutual Funds) Regulations, 1996, what is the minimum profitability track record required for an entity to act as a sponsor of a mutual fund?
AProfit-making for at least 3 out of the immediately preceding 5 years, including the fifth year.
BProfit-making for at least 3 out of the immediately preceding 5 years.
✓Profit-making for at least 3 out of the immediately preceding 5 years, including the immediately preceding year.
DProfit-making for at least 2 out of the immediately preceding 3 years, including the immediately preceding year.
💡 SEBI (Mutual Funds) Regulations, 1996, specify that a sponsor must have a sound track record of financial soundness and general reputation. Specifically, the sponsor or its group must be profit-making for at least 3 out of the immediately preceding 5 years, including the immediately preceding year.
Q52HardAsset Management Company (AMC) Board Composition
According to SEBI (Mutual Funds) Regulations, 1996, what is the minimum proportion of independent directors required on the Board of Directors of an Asset Management Company (AMC)?
AAt least one-third of the directors.
✓At least 50% of the directors.
CAt least two-thirds of the directors.
DAt least 75% of the directors.
💡 SEBI (Mutual Funds) Regulations, 1996, Regulation 21 (Board of directors of asset management company) mandates that the Asset Management Company shall have at least fifty per cent of the directors as independent directors.
Q53MediumCustodian's Role and Responsibilities
Which of the following is a specific responsibility of a Custodian appointed by a mutual fund, beyond merely holding the securities?
AMaintaining individual unit holder records and processing transactions.
BValuing the scheme's portfolio on a daily basis.
✓Ensuring reconciliation of investment records with the fund's books.
DAppointing the statutory auditor for the mutual fund.
💡 As per SEBI (Mutual Funds) Regulations, 1996, the Custodian is responsible for the safekeeping of securities and other assets of the fund, and also for ensuring reconciliation of investment records with the fund's books. Maintaining unit holder records is the RTA's role, portfolio valuation is AMC's/Fund Accountant's, and appointing auditors is the Trustees' role.
Q54MediumDuties and Responsibilities of Trustees
Which of the following is a primary responsibility of the Board of Trustees regarding the Asset Management Company (AMC)?
ATo directly manage the investment portfolios of the mutual fund schemes.
✓To ensure that the AMC has adequate infrastructure and systems to manage the mutual fund's operations.
CTo appoint the CEO and all key personnel of the AMC without consultation.
DTo determine the pricing of units for all new fund offers.
💡 The Trustees are responsible for overseeing the AMC's operations. A key duty is to ensure that the AMC has the necessary systems, processes, and infrastructure in place to effectively manage the mutual fund's operations, including investment management, administration, and investor services, in compliance with regulations. Investment management is the AMC's role, not the Trustees'.
Q55MediumRestrictions on Asset Management Company (AMC)
Under the SEBI (Mutual Funds) Regulations, 1996, an Asset Management Company (AMC) is generally prohibited from engaging in which of the following activities?
AProviding investment advisory services to the mutual fund schemes it manages.
BManaging venture capital funds or portfolio management services for other clients.
✓Acting as a trustee for any other mutual fund.
DEngaging in proprietary trading using its own funds.
💡 The SEBI (Mutual Funds) Regulations, 1996, strictly separate the roles of the Asset Management Company (AMC) and the Trustee to ensure independent oversight. An AMC cannot act as a Trustee for any mutual fund, including its own, due to the inherent conflict of interest. While there are restrictions and conditions for other activities like managing venture capital funds/PMS or proprietary trading, acting as a Trustee is a fundamental prohibition.
Q56MediumSponsor Eligibility Criteria
As per SEBI (Mutual Funds) Regulations, 1996, what is the minimum duration for which a sponsor must have a positive net worth in all immediately preceding five years, including profits in at least three of these five years, to be eligible to establish a mutual fund?
AImmediately preceding 3 years
✓Immediately preceding 5 years
CImmediately preceding 7 years
DImmediately preceding 10 years
💡 SEBI (Mutual Funds) Regulations, 1996, Chapter II, Regulation 7(a)(ii) specifies that the sponsor must have a positive net worth for all the immediately preceding five years and have profit in at least three out of the five immediately preceding years. Additionally, the net worth in the immediately preceding fifth year must be more than the capital contribution of the sponsor in the asset management company.
Q57EasyRole of Custodian
Which entity in the legal structure of a mutual fund is primarily responsible for holding the securities and other assets of the fund in safe custody on behalf of the unitholders?
AThe Sponsor
BThe Registrar and Transfer Agent (RTA)
✓The Custodian
DThe Asset Management Company (AMC)
💡 The Custodian is an independent entity appointed by the trustees with SEBI's approval, whose primary responsibility is to hold the securities and other assets of the mutual fund in safe custody, ensuring their safekeeping and proper accounting.
Q58MediumSponsor's role and eligibility
What is the minimum percentage of contribution a sponsor is required to make to the net worth of the Asset Management Company (AMC) of a mutual fund?
💡 As per SEBI (Mutual Funds) Regulations, 1996, a sponsor must contribute at least 40% of the net worth of the Asset Management Company (AMC). This ensures that the sponsor has a significant stake and commitment to the AMC's operations.
Q59EasyRole and Independence of Trustees
What is the minimum proportion of independent trustees required on the board of trustees for a mutual fund in India, as per SEBI regulations?
AOne-third of the total number of trustees
BHalf of the total number of trustees
✓Two-thirds of the total number of trustees
DAll trustees must be independent
💡 As per SEBI (Mutual Funds) Regulations, 1996 (now 1999), at least two-thirds of the trustees of a mutual fund must be independent persons, meaning they should not be associated with the sponsor or the Asset Management Company (AMC). This provision is crucial to ensure the trustees can act in the best interest of the unitholders without any conflict of interest.
Q60EasyRole of Trustee
In the legal structure of a mutual fund, which entity holds the assets of the fund in trust for the benefit of the unitholders?
✓The Trustee
BThe Asset Management Company (AMC)
CThe Sponsor
DThe Custodian
💡 The mutual fund is established as a trust, and the Trustee holds the assets of the fund in trust for the benefit of the unitholders. While the Custodian physically holds the securities, the legal ownership and fiduciary responsibility to unitholders lie with the Trustee.
Q61EasySponsor's eligibility criteria
A sponsor establishing a mutual fund is required to contribute a minimum percentage of the Asset Management Company's (AMC) net worth. What is this minimum percentage?
💡 As per SEBI (Mutual Funds) Regulations, 1996, a sponsor must have a sound track record and contribute at least 40% to the net worth of the Asset Management Company (AMC). This ensures the sponsor's financial commitment to the mutual fund business.
Q62MediumTrustees and their independence
What is the minimum proportion of independent trustees required on the Board of Trustees of a mutual fund, as per SEBI (Mutual Funds) Regulations, 1996?
ANot less than one-third of the trustees
BNot less than half of the trustees
✓Not less than two-thirds of the trustees
DNot less than three-fourths of the trustees
💡 As per SEBI (Mutual Funds) Regulations, 1996, Chapter VI, Clause 18(1)(c), at least two-thirds of the trustees on the Board of Trustees must be independent trustees, who are not associated with the sponsor or its associates.
Q63HardCustodian's role and liability
Under what circumstance can a Custodian of a mutual fund be typically held liable for loss or damage to the securities held by it?
AOnly if the loss is due to unforeseen natural calamities (force majeure).
BIn all circumstances, as they are the ultimate holders of assets, irrespective of fault.
✓If the loss is caused by its own negligence, willful default, or fraud.
DOnly if the loss exceeds a pre-defined threshold agreed upon with the AMC.
💡 A Custodian is responsible for the safekeeping of the mutual fund's securities. While they are not insurers against all risks, they can be held liable for loss or damage to securities if it is directly attributable to their own negligence, willful default, or fraudulent acts. Force majeure events or acts beyond their control typically exempt them from liability. This is a standard principle of custodial agreements and regulatory expectations.
Q64MediumTrustee's Responsibilities and Oversight
Which of the following is a key responsibility of the Board of Trustees of a mutual fund, specifically pertaining to the Asset Management Company (AMC)?
AAppointing the statutory auditor for the mutual fund.
✓Ensuring that the AMC has adequate systems in place for managing risks and preventing conflicts of interest.
CApproving the annual marketing budget of the AMC.
DDeciding the investment strategy for each scheme launched by the AMC.
💡 As per SEBI (Mutual Funds) Regulations, 1996, the Trustees are responsible for overseeing the AMC and ensuring that it has adequate systems in place for managing risks, preventing conflicts of interest, and ensuring compliance with regulations, among other duties. While Trustees appoint the auditor, ensuring AMC's systems for risk and conflict management is a more specific oversight function.
Q65EasySponsor eligibility criteria
Which of the following is a fundamental eligibility criterion for an entity to act as a sponsor for a mutual fund in India, beyond financial net worth requirements?
AIt must be a publicly listed company on a recognized stock exchange for at least 3 years.
✓It must have a sound track record and general reputation of fairness and integrity in all business transactions.
CIt must have prior experience in managing at least two other mutual funds for a minimum of 5 years.
DIt must commit to investing at least 25% of the initial corpus of each scheme launched.
💡 As per SEBI (Mutual Funds) Regulations, 1996, a sponsor must have a sound track record and general reputation of fairness and integrity in all business transactions as a key eligibility criterion. While financial strength and positive net worth for a specified period are also crucial, the general reputation for fairness and integrity is a non-negotiable qualitative requirement.
Q66MediumSponsor eligibility criteria
According to SEBI (Mutual Funds) Regulations, 1996, what is the minimum positive net worth a sponsor must have for at least five years, including profits in three of the immediate preceding five years, to be eligible to sponsor a mutual fund?
AINR 50 crores
✓INR 100 crores
CINR 25 crores
DINR 5 crores
💡 SEBI (Mutual Funds) Regulations, 1996, specify that a sponsor must have a sound track record, including a positive net worth for at least five years and profits in at least three of the immediately preceding five years. The minimum positive net worth required is INR 100 crores.
Q67MediumRole of ancillary service providers (Custodian)
Who is primarily responsible for the appointment of the Custodian for the assets of a mutual fund scheme?
AThe Sponsor of the mutual fund.
BThe Asset Management Company (AMC).
✓The Board of Trustees.
DSEBI (Securities and Exchange Board of India).
💡 The Custodian, responsible for holding the securities and other assets of the mutual fund schemes, is appointed by the Board of Trustees. This appointment requires prior approval from SEBI and is a critical part of the trustees' fiduciary duty to safeguard unitholders' interests, as per Regulation 26(d) of the SEBI (Mutual Funds) Regulations, 1996.
Q68HardAMC Board Composition and Restrictions
What is the maximum permissible percentage of directors on the board of an Asset Management Company (AMC) who can also be directors on the board of the sponsor company, as per SEBI (Mutual Funds) Regulations, 1996?
✓Not more than one-third.
BNot more than one-fourth.
CNot more than fifty percent.
DNot more than seventy-five percent.
💡 Regulation 21(d) of SEBI (Mutual Funds) Regulations, 1996 states that not more than one-third of the directors of the asset management company shall be directors of the same sponsor or any of its associates or subsidiaries. Additionally, not less than fifty percent of the directors of the AMC shall be independent directors.
Q69MediumAsset Management Company (AMC) Requirements
Which of the following statements regarding the Asset Management Company (AMC) of a mutual fund is INCORRECT as per SEBI (Mutual Funds) Regulations?
✓The AMC must have a minimum net worth of Rs. 25 crore at all times.
BAt least 50% of the directors of the AMC must be independent directors.
CNo director of the AMC shall be a director of another Asset Management Company.
DThe Chairman of the AMC's Board of Directors must be an independent director.
💡 As per SEBI (Mutual Funds) Regulations, Regulation 21(1)(f), the Asset Management Company (AMC) shall have a minimum net worth of Rs. 50 crore at all times. Therefore, stating Rs. 25 crore is incorrect. Options b, c, and d are correct requirements under the regulations.
Q70EasyRole of Custodian
Which of the following intermediaries is primarily responsible for the safekeeping of a mutual fund's physical securities and other assets?
ARegistrar and Transfer Agent (RTA)
BSponsor
✓Custodian
DAsset Management Company (AMC)
💡 The Custodian is the entity registered with SEBI that is responsible for holding the securities and other assets of a mutual fund in safe custody, ensuring their physical and electronic safekeeping. The RTA manages investor records, the Sponsor sets up the fund, and the AMC manages the investments.
Q71HardInter-entity Restrictions and Board Composition
Which of the following statements regarding the relationship between the Asset Management Company (AMC) and the Board of Trustees is FALSE?
ANo director of the AMC can be a trustee of the same mutual fund.
BNo trustee can be a director of the AMC of the same mutual fund.
CTrustees are appointed by the sponsor with the approval of SEBI.
✓The AMC board must have at least one-third independent directors.
💡 As per SEBI (Mutual Funds) Regulations, 1996, Regulation 21(2), the Board of Directors of the asset management company shall have at least fifty percent independent directors. Options A and B are true to ensure separation of powers and avoid conflicts of interest (implied by Regulations 16(3) and 21(1)(b)). Option C is also true as per Regulation 16(1), which states that the sponsor shall appoint the trustees with the prior approval of SEBI.
Q72EasyRole of Custodian
Which of the following entities is primarily responsible for holding the securities and other assets of a mutual fund in safe custody?
AThe Sponsor
BThe Trustee
CThe Asset Management Company (AMC)
✓The Custodian
💡 The Custodian is responsible for holding the securities and other assets of the mutual fund in safe custody, as mandated by SEBI (Mutual Funds) Regulations, 1996. The AMC manages the investments, the Trustee oversees the AMC, and the Sponsor establishes the fund.
Q73HardRegistrar and Transfer Agent (RTA)
What is a mandatory regulatory requirement for a Registrar and Transfer Agent (RTA) providing services to a mutual fund in India?
AThe RTA must have a minimum paid-up capital of INR 100 crores.
BThe RTA must be a subsidiary of the Asset Management Company (AMC).
✓The RTA must be registered with SEBI.
DThe RTA must maintain all unitholder records in physical format only.
💡 As per SEBI (Registrars to an Issue and Share Transfer Agents) Regulations, 1993, and SEBI (Mutual Funds) Regulations, 1996 (now 1999), any entity acting as a Registrar and Transfer Agent for a mutual fund must be registered with SEBI. This ensures that RTAs adhere to regulatory standards for investor servicing and data management. There is no specific minimum paid-up capital requirement like INR 100 crores, nor is it mandatory for the RTA to be a subsidiary of the AMC. Records can be maintained in both physical and electronic formats.
Q74EasyRole of Custodian
Which of the following entities in a mutual fund structure is primarily responsible for holding the securities and other assets of the mutual fund in safe custody?
AAsset Management Company (AMC)
BRegistrar and Transfer Agent (RTA)
✓Custodian
DTrustee
💡 The Custodian is appointed by the Trustees with SEBI's prior approval and is primarily responsible for safe-keeping the securities and other assets of the mutual fund.
Q75MediumTrustee Board Composition
As per SEBI (Mutual Funds) Regulations, what is the minimum proportion of independent directors required on the Board of Trustees (or the Trustee Company's Board of Directors) of a mutual fund?
AAt least one-third of the total directors.
BAt least half of the total directors.
✓At least two-thirds of the total directors.
DAll directors must be independent.
💡 SEBI (Mutual Funds) Regulations, Regulation 16(5) mandates that two-thirds of the trustees shall be independent trustees and shall not be associated in any manner with the sponsor or asset management company.
Q76EasyLegal Structure of Mutual Funds
In India, a mutual fund is legally constituted as which of the following entities?
AA company under the Companies Act, 2013.
BA partnership firm under the Indian Partnership Act, 1932.
✓A trust under the Indian Trusts Act, 1882.
DA cooperative society under the Multi-State Cooperative Societies Act, 2002.
💡 As per SEBI (Mutual Funds) Regulations, 1996, a mutual fund in India is established as a trust under the Indian Trusts Act, 1882. This structure ensures that the assets are held for the benefit of the unitholders by the trustees.
Q77MediumSponsor Eligibility Criteria
Which of the following is an eligibility criterion for an entity to act as a sponsor of a mutual fund in India, as per SEBI (Mutual Funds) Regulations, 1996?
AThe sponsor must have a positive net worth for at least 3 out of the immediately preceding 5 years.
BThe sponsor must have a profit before tax for at least 3 out of the immediately preceding 5 years, including the fifth year.
CThe sponsor must have a profit after tax for at least 5 out of the immediately preceding 7 years, including the seventh year.
✓The sponsor must have a profit after tax for at least 3 out of the immediately preceding 5 years, including the fifth year.
💡 As per Regulation 7(b) of SEBI (Mutual Funds) Regulations, 1996, a sponsor must have a positive net worth for all the immediately preceding five years and a profit after providing for depreciation and interest for at least three out of the immediately preceding five years, including the fifth year.
Q78MediumSponsor's Eligibility Criteria
As per SEBI (Mutual Funds) Regulations, which of the following is a key eligibility criterion for a sponsor to establish a mutual fund in India?
AThe sponsor must have a minimum net worth of INR 500 crores for the last three consecutive financial years.
✓The sponsor must have a sound track record and general reputation of fairness and integrity in all business transactions, particularly in the financial services sector.
CThe sponsor must hold at least 75% of the share capital of the Asset Management Company (AMC) at all times.
DThe sponsor must have at least five years of experience exclusively in the manufacturing sector.
💡 As per SEBI (Mutual Funds) Regulations, 1996 (now 1999), a key condition for a sponsor to be eligible to establish a mutual fund is to have a sound track record and general reputation of fairness and integrity in all business transactions, especially in the financial services sector. While there are net worth requirements related to the AMC, option (a) is not a direct eligibility criterion for the sponsor itself. Option (c) describes an ownership requirement, not a general eligibility to establish. Option (d) is incorrect as experience in the financial services sector is required.
Q79MediumAMC Board composition
What is the minimum requirement for the proportion of independent directors on the board of directors of an Asset Management Company (AMC) as per SEBI regulations?
AAt least one-third of the directors must be independent.
BAt least two-thirds of the directors must be independent.
✓At least half of the directors must be independent.
DAll directors must be independent.
💡 As per SEBI (Mutual Funds) Regulations, 1996, at least half of the directors on the board of directors of an Asset Management Company (AMC) must be independent directors. This provision is designed to ensure good corporate governance and minimize potential conflicts of interest with the sponsor.
Q80MediumTrustee board independence
What is the minimum proportion of independent directors required on the board of a Trustee Company overseeing a mutual fund?
AAt least one-third of the directors
✓At least half of the directors
CAt least two-thirds of the directors
DAll directors must be independent
💡 As per Regulation 16(b) of the SEBI (Mutual Funds) Regulations, 1996, at least half of the trustees (directors on the board of the Trustee Company) shall be independent persons and shall not be associated with the sponsor or the asset management company in any manner.
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