Types of Mutual Funds

1. Open-Ended Mutual Funds
   These funds do not have a lock-in period or maturity date, allowing continuous investments and redemptions. They are ideal for investors seeking liquidity.
2. Closed-Ended Mutual Funds
   Closed-ended funds have a specified lock-in period. Investors can only buy into these funds during the New Fund Offer (NFO) period, and they can redeem their investments only after the lock-in period expires.
3. Interval Mutual Funds
   This type allows trading of units at pre-defined intervals, combining the features of both open-ended and closed-ended funds.

Prerequisites for Mutual Fund Registration with SEBI

To register a mutual fund with SEBI, applicants must meet several requirements:

• Legal Structure: Mutual funds must be registered as trusts under the Indian Trust Act, 1881.
• Asset Management Company: An AMC with a minimum net worth of ?5 crores must be established separately.
• Experience: Applicants must have at least 5 years of experience in financial services and a positive net worth.
• Fit and Proper Criteria: Applicants must meet SEBI's fit and proper criteria, ensuring sound business operations.
• Capital Contribution: A sponsor must contribute at least 40% towards the net worth of the AMC.
• Custodian Appointment: Appoint a custodian as per regulations for the custody of assets.

Required Documents for Mutual Fund Registration

The following documents are required for the registration of mutual funds with SEBI:

• List of associated companies and their registration numbers.
• Declaration of any violations or regulatory actions against sponsors or associated companies.
• Two sets of the Memorandum of Association (MoA) and Articles of Association (AoA) for the AMC and Trustee Company.
• Auditor’s certificate confirming the sponsor’s capital contribution and the AMC’s net worth.
• Trust Deed and Investment Management Agreement copies.
• Business plan and infrastructure details of the AMC.
• Undertaking from the sponsor to provide additional capital until the AMC breakeven.

It is crucial to provide all required information within 30 days of SEBI's communication; otherwise, the application may be closed.

Procedure for Mutual Fund Registration with SEBI

1. Application Filing: Complete and submit Form A for registration.
2. Document Submission: Submit the application along with necessary documents and payment of fees as per SEBI regulations.
3. Application Scrutiny: SEBI will scrutinize the application and documents, verifying compliance.
4. Registration Certificate: Upon satisfying all requirements, SEBI will issue a registration certificate.

Annual Fees for Mutual Funds

Mutual funds must pay an annual fee before April 15 each year based on their Average Assets Under Management (AAUM):

• AAUM up to ?10,000 crore: 0.0015% of AAUM
• AAUM above ?10,000 crore: 0.0010% of the excess portion
• Minimum Fee: ?2,50,000
• Maximum Fee: ?1,00,00,000