SEBI clarifies family trusts cannot sponsor mutual funds

Securities and Exchange Board of India has clarified that family trusts cannot act as sponsors of mutual funds because they are not recognised as body corporates under mutual fund regulations.

The clarification came in response to a query from First Water Capital Advisory LLP. SEBI stated that mutual fund sponsors must be body corporates acting individually or together with another body corporate for establishing mutual funds or mutual fund lite structures.

The clarification provides greater regulatory certainty for fund sponsors and investment structures in the asset management industry. It also reinforces SEBI’s emphasis on maintaining a clearly defined corporate governance framework within the mutual fund sector.

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