INDIA Law and Practice Contributed by: Tejesh Chitlangi, Sushreet Pattanayak, Pooja Mehta and Anita Jain, IC Universal Legal
Periodic reporting The mutual fund’s AMC is required to make various disclosures on daily, monthly, quarterly, half-yearly and yearly basis to the investors, trustees of the mutual fund and SEBI, such as daily disclosure of net asset value, a quarterly report to the trustee on operations of the mutual fund, an annual report to the SEBI and investors, intimations of any deviations from the scheme’s objective, etc. Retail Schemes under GIFT Funds See 2.1.4 Disclosure Requirements . 3.2 Fund Investment 3.2.1 Types of Investors in Retail Funds Domestic Mutual Funds The Indian retail market has seen a remark - able surge in activity among several investor categories, including individual retail investors, institutional investors, domestic and foreign investors, high-net-worth investors and non- resident investors. This is reflected in the expo - nential increase in the mutual fund segment’s AUM from INR27.05 trillion as on 30 November 2019 to INR68.08 trillion on 30 November 2024, according to the AMFI. Retail Schemes under GIFT Funds See 2.2.3 Types of Investors in Alternative Funds 3.2.2 Legal Structures Used by Fund Managers Domestic Mutual Funds Mutual Funds are managed by an asset man - agement company (AMC) which is structured as a limited liability company under the Companies Act, 2013.
Retail Schemes Under GIFT Funds Please refer to 3.2.2 Legal Structures Used by Fund Managers . 3.2.3 Restrictions on Investors Domestic Mutual Funds There are no restrictions on investors making investments in mutual funds. However, they must meet the conditions of the Prevention of Money Laundering Act, 2002, and adhere to the SEBI’s “Guidelines on Anti-Money Laundering (AML) Standards and CFT/Obligations of Securities Market Intermediaries under the Prevention of Money Laundering Act, 2002 and Rules Framed Thereunder” (“AML/CFT Guidelines”) setting down the AML KYC guidelines. Further, under these guidelines, the mutual fund is required to ensure that the investor is from a competent jurisdiction, is not a Politically Exposed Person (PEP) and is not undertaking any dubious or unusual transactions. With respect to investment in mutual funds by persons resident outside India, certain jurisdic - tions restrict solicitation of foreign funds and accordingly, mutual funds may impose condi - tions on such investors at the time of onboarding them.
Retail Schemes Under GIFT Funds See 2.2.3 Restrictions on Investors 3.3 Regulatory Environment
3.3.1 Regulatory Regime Domestic Mutual Funds Investment restrictions
Various restrictions on investments by a mutual fund scheme are covered by Regulation 44(1) read with Schedule VII of the MF Regulations. These include limits with respect to exposure in various instruments, issuer company, and group-level restrictions. They are presented
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