Role of sponsor, Financial Management

Assignment Help:

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.

 


Related Discussions:- Role of sponsor

Calculate the net income-asset intensity-return on assets, Analyze a Startu...

Analyze a Startup How would you select an organizational form for a business? Think about this question as you read the following scenario. Joe Jones has created a business

Managerial finance functions, Managerial Finance Functions Need skilful...

Managerial Finance Functions Need skilful planning, control and execution of the financial activities. There are four significant managerial finance functions. These are as sho

Explain difference between business risk and financial risk, What is the di...

What is the difference between business risk and financial risk? Business risk refers to the improbability a company has with regard to its operating income also known as earni

What do you mean by utility, Q. What do you mean by Utility? Utility: -...

Q. What do you mean by Utility? Utility: - Financial leverage assists considerably the financial manager while devising the capital structure of the company. A high financial l

Explain about shareholders equity, Does the shareholders' equity represent ...

Does the shareholders' equity represent the savings a company has accumulated through the years? No. The number which shows in the Shareholder's Equity of a company that was fo

Equity instruments, QUASI-INSTRUMENTS These instruments are considered ...

QUASI-INSTRUMENTS These instruments are considered as debt instruments for a time-frame and are converted into equity at the option of the investor (or at company's option) aft

What happens when a bank charges discount interest on a loan, What happens ...

What happens when a bank charges discount interest on a loan? While a bank charges discount interest on a loan the required interest payment is subtracted from the loan carries o

Financial Management, Financial Management Initial Disclosures During the ...

Financial Management Initial Disclosures During the process of discussion and negotiation with the client with regard to the financial affairs and the manner of operations of the

How do financial managers decide which proposed capital, For a given IOS an...

For a given IOS and MCC, how do financial managers decide which proposed capital budgeting projects to accept, and which to reject? For a given MCC and IOS, all independent pro

Report on acquiring the turbine machine in leaminger plc, REPORT To: T...

REPORT To: The Directors of Leaminger plc From: A business advisor Date: December 2002 Subject: Acquiring the turbine machine Introduction In financial

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd