The trustees
The guardians who hold it for you
Students mix up trustees and the AMC constantly, and the exam knows it. One line fixes it: trustees are the referee, the AMC is the player.
Requirements such as the minimum number of trustees and the independence ratio are set by SEBI and can be revised. Education for the NISM Series V-A exam, not financial advice.
- 1
The trustees hold the fund's property in trust for you. They watch over it, they do not manage the money.
- 2
The sponsor appoints the trustees, but only with prior approval from SEBI.
- 3
There must be at least 4 trustees, and at least two-thirds of them must be independent.
- 4
Trustees can be a board of individual trustees or a trustee company.
- 5
Their core duty is to ensure the AMC follows the rules and to protect unit holders' interest.
If the AMC wants to launch a scheme or change a fee, the trustees check it serves investors first. They are the referee, not a player.
The trustees stand on the side of the field. They never kick the ball, that is the AMC's job.
Trustees oversee, they do not manageBefore the AMC does anything big, the trustees check it is fair to investors and within the rules.
They approve and monitorIf the AMC bends a rule, the trustees are the ones answerable to SEBI for stopping it.
They protect unit holdersTrustees hold and guard your money, the AMC manages it. Referee, not player.
Practice
🔥 0 streakReal exam format. Answer by voice, tap, or press 1 to 4. No negative marking, so always attempt.
Who appoints the trustees, and with whose approval?
A mutual fund must have at least how many trustees?
What share of the trustees must be independent?
The trustees' main job is to:
Trustees can be structured as:
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Education for the exam, not financial advice. Answers can be wrong, so confirm figures against the workbook.