The Securities and Exchange Board of India (SEBI), through a clarification dated 20th April 2026, has addressed queries relating to the Mutual Fund Regulations, 2026, specifically concerning Asset Management Companies (AMCs) under Route-2.
1. Net Worth Requirements for AMCs (Route-2)
As per the regulations:
- At the time of registration AMC must have a net worth of ₹150 crore, contributed by the sponsor
- Ongoing requirement:
-
- Maintain ₹100 crore net worth
- Can be reduced to ₹50 crore after 5 consecutive years of profitability
2. Query 1 – Composition of Net Worth (Equity + Preference Shares)
- The applicant proposed:
-
- ₹50 crore in equity shares
- ₹100 crore in redeemable preference shares (redeemable after 5 years of profits)
- SEBI’s Response:
-
- No clarification provided
- Cited policy-related considerations
3. Query 2 – Can a Family Trust Act as Sponsor?
SEBI clarified:
- A sponsor must be a “body corporate”
- A family trust is not a body corporate
Therefore:
- A family trust cannot act as a sponsor of a mutual fund
4. Important Caveat by SEBI
- The clarification:
-
- Is based only on the facts presented
- Does not constitute a final or binding decision
- Compliance with other applicable laws may still be required
5. Conclusion
The clarification reinforces SEBI’s strict interpretation of sponsor eligibility, ensuring only corporate entities can sponsor mutual funds, while leaving flexibility open on capital structure questions pending policy review.
Click Here To Read The Full Update
The post Family Trust Can’t Be Mutual Fund Sponsor | SEBI Clarifies appeared first on Taxmann Blog.
