The rights and obligations of the trustees under SEBI (Mutual Fund) Regulations along with due diligence are as under:
- Enter into an investment management agreement.
- Shall contain clauses necessary for the purpose of making investments.
- Shall have the right to obtain from the asset management company the information necessary by the trustees.
- Make sure that all the required appointments are done before the launch of any scheme.
- Should keep a check on the working of AMC.
- Should keep a track on the transactions of AMC.
- In case the working of AMC is not in accordance with the norms, have the rights to take necessary remedial steps.
- Should make sure that the steps of transactions are in accordance with the provisions of the trust deed.
- Should obtain the consent of the unit holders.
- Shall review on a quarterly basis.
- Shall abide by the Code of Conduct as specified.
- Should furnish the necessary reports on a half yearly basis.
- Shall exercise the general due diligence and specific due diligence as prescribed.
Trustees shall exercise due diligence as follows:
General Due Diligence.
- Should be discerning in the appointment of the directors.
- Shall review the desirability of the continuance of the asset management company.
- Shall ensure that the trust property is properly protected.
- Shall ensure that the service provider are holding appropriate registration.
- Shall arrange for test checks of the service contracts.
- Shall report to board for any special development.
Specific Due Diligence.
- Includes obtaining the internal audit report and compliance certificate at regular intervals.
- Hold meetings of trustees.
- Consider and maintain the reports.
- Prescribe to code of ethics.
- Communicate the deficiencies to the asset management company.