Oct 19, 2023

SEBI Specifies ‘Core Responsibilities’ of Trustees While Exercising Due Diligence on AMCs

SEBI, by way of Circular dated July 7, 2023, has specified certain ‘core responsibilities’ in respect of which the trustees of a mutual fund will be required to exercise independent due diligence and not rely on professional firms such as audit firms, legal firms etc. for carrying out due diligence on behalf of the trustees. The key core responsibilities of trustees include inter alia ensuring:

i.    Fairness of fees charged by AMCs, and review performance of AMCs in its schemes;

ii.   Adequate systems are in place to prevent mis-selling and misconduct (market abuse/ misuse of information); and

iii.  System level checks being in in place at AMCs’ end to prevent fraudulent transactions including front running by employees, form splitting/ mis-selling by distributors etc.

The provisions of the Circular will come into effect from January 01, 2024.




These are the views and opinions of the author(s) and do not necessarily reflect the views of the Firm. This article is intended for general information only and does not constitute legal or other advice and you acknowledge that there is no relationship (implied, legal or fiduciary) between you and the author/AZB. AZB does not claim that the article's content or information is accurate, correct or complete, and disclaims all liability for any loss or damage caused through error or omission.