ORGANIZATION OF MUTUAL FUND-

For organization of mutual fund there is a set criterion which has to be opted.
There are many entities involved and the diagram below illustrates the organizational set up
of a mutual fund:

SPONSORS
The sponsor establishes the mutual fund and gets it registered with SEBI. The mutual fund needs to be
constituted in the form of a trust and the instrument of the trust should be in the form of a deed
registered under the provisions of the Indian Registration Act, 1908. The sponsor is required to
contribute at least 40% of the minimum net worth (Rs. 10 crore) of the asset management company.
The board of trustees manages the MF and the sponsor executes the trust deeds in favor of the trustees.
It is the job of the MF trustees to see that schemes floated and managed by the AMC appointed by the
trustees are in accordance with the trust deed and SEBI guidelines.

ASSET MANAGEMENT COMPANY

The sponsor also appoints the asset management company (AMC) for the investment and
administrative functions. The AMC does the research, the managers the corpus of the fund. It
launches the various schemes of the fund, manages them, and then liquidates them at the end
of their term. It also takes care of the other administrative work of the fund. It receives an
annual management fee from the fund for its services.

BOARD OF TRUSTEES

The board of trustees is responsible for protecting the investor’s interests. Under the SEBI
regulation 1996, trustee means a person who holds the property of the mutual fund in trust,
for the benefit of the unit holders. The word “trustee” can be used to denote board of trustees.
In case a trustee company governs the trust, it can be used to denote either the trustee
company or its directors.

CUSTODIANS

The custodians are appointed by the sponsor to look after the transfer and storage of
securities. Only a registered custodian under the SEBI Regulation can act as a custodian of a
mutual fund. The functions of custodian a cover a wider range of services like safe keeping of
securities bid settlement, corporate action, and transfer agent. In addition, they may be
contracted to perform administrative functions like fund accounting, cash management and
other similar functions