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What are the Rights and Obligation of the Trustees under SEBI (Mutual Fund)?

What are the Rights and Obligation of the Trustees under SEBI (Mutual Fund)?


1 Answer
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.

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February 12, 2019