Audit Committee of Asset Management Companies (AMCs)

Last updated: 09 February 2022

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Asset Management Companies (AMCs) are now required to establish an Audit Committee, a change recommended by the Mutual Fund Advisory Committee. This committee will oversee financial reporting, internal controls, and compliance with laws and regulations related to mutual fund operations. The circular details the committee's role, membership criteria, meeting frequency, and reporting structure, with these new guidelines coming into effect from August 1, 2022.

Securities and Exchange Board of India CIRCULAR No. SEBI/HO/IMD/IMD-I DOF2/P/CIR/2022/17 Dated: February 09, 2022 All Mutual Funds (MFs)/ Asset Management Companies (AMCs)/ Trustee Companies/ Board of Trustees of Mutual Funds/ Association of Mutual Funds in India (AMFI) Sir / Madam, Subject: Audit Committee of Asset Management Companies (AMCs) 1. Currently, the requirement for an Audit Committee is at the level of trustees of Mutual Funds. The working group constituted fo

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FAQ :

The SEBI circular mandates that Asset Management Companies (AMCs) must constitute an Audit Committee.

The formation of an Audit Committee at the AMC level was recommended by the Mutual Fund Advisory Committee (MFAC).

The Audit Committee is responsible for overseeing the financial reporting process, audit process, internal controls, and compliance with laws and regulations concerning the AMC's mutual fund business.

The Audit Committee must have at least three directors, with at least two-thirds of the members being independent directors. All members must be able to understand financial statements, and at least one must have finance and accounts experience.

The Audit Committee must hold at least four meetings in a financial year, with no more than 120 days between meetings.

These guidelines come into effect from August 01, 2022.

Notification No : SEBI/HO/IMD/IMD-I DOF2/P/CIR/2022/17
Source : https://www.sebi.gov.in/legal/circulars/feb-2022/circular-on-audit-committee-of-asset-management-companies-amcs-_55987.html

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