Student mutual fund - registration

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Querist : Anonymous

Querist : Anonymous (Querist)

11 May 2015 We are a group of MBA students willing to start a student run mutual fund under the college. The purpose of the this is to study the Indian market, and to know the portfolio management and art of investing. We are also planning to invest funds on behalf of friends, faculties and students from the institute. We are in a dilemma for the registration procedure. Should we register it as a Company or a society or any other entity

Please help us.

Thanks

Pratik Shah

Pratik Shah (Expert)
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11 May 2015 Hi, I appreciate that you are planning to start a very big thing. but as a procedure, you need first see the basic structure required for setting up a mutual fund.

A mutual fund is set up in the form of a TRUST, which has sponsor, trustees, asset management company (AMC) and custodian. The trust is established by a sponsor or more than one sponsor who is like promoter of a company. The trustees of the mutual fund hold its property for the benefit of the unit holders. Asset Management Company (AMC) approved by SEBI manages the funds by making investments in various types of securities. Custodian, who is registered with SEBI, holds the securities of various schemes of the fund in its custody. The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of SEBI Regulations by the mutual fund.

SEBI Regulations require that at least two thirds of the directors of trustee company or board of trustees must be independent i.e. they should not be associated with the sponsors. Also, 50% of the directors of AMC must be independent. All mutual funds are required to be registered with SEBI before they launch any scheme.

In short, you will atleast need to register one Trust (to be registered under Trust Act) and one Company (Asset Management Company - to be registered under Companies Act, 2013).

You can further refer SEBI regulation.

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Querist : Anonymous

Querist : Anonymous (Querist)

14 May 2015 Thank you sir. When I read the regulations about the Mutual fund, it is mentioned that an AMC should have a minimum networth of 50 Cr which is not possible for a student run mutual fund. As our group is just an initiative to start the investment club, how we proceed further ?
https://www.sebi.gov.in/cms/sebi_data/commondocs/mutualfundupdated06may2014.pdf

Pratik Shah

Pratik Shah (Expert)
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14 May 2015 Then it is not possible to start your own mutual fund. That was the reason I mentioned 'Very Big Thing' in my earlier message.

You can do one thing. You can start one LLP or Company which will carry out business of consulting in Investment/Mutual Fund and shares. In this case, you can not take money from investors. You can only guide them 'Where to invest'. You can prepare Research Reports/Analysis Reports etc.

In detail, this company/LLP will do following business.

"To carry on business of financial, management and technical consultants and advisors in India and abroad for all types of fields including but not limited to finance, investment, industrial enterprises, trade, commerce, business, estate related activities, technical, helping finalization of contracts and management collaboration and to provide services of preparation of feasibility, project & research reports related to mentioned fields".

Setting up Mutual Fund is not so easy. You need big investment.

Querist : Anonymous

Querist : Anonymous (Querist)

15 May 2015 Sir,

Thanks a lot. Sorry to ask this once again sir. I came to know that Management Development Institute, Gurgaon is running a student run mutual fund which is a group of students initiative. Only problem is that , funds can be collected only from students. I tried to search about Student run mutual fund, but nobody knows about it.

www.thehindu.com/todays-paper/tp-features/tp-educationplus/invest-and-learn/article5437436.ece

https://www.mdi.ac.in/students-life/unnati.html

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