ANNEXURE 2
OBLIGATIONS OF THE TRUSTEES AND SPECIFIC DUE DILIGENCE

 
 
Reg. No OBLIGATIONS COMPLIANCE FOR DUE DILIGENCE
18(1) Trustees & AMC to enter into investment management agreement with prior approval of SEBI Submission of executed Investment management agreement along with resolution of the trustees approving the same to SEBI.
18(22) Trustees to abide by code of conduct Compliance with all the matters contained herein.
18(4) Trustees to ensure that before launch of scheme AMC has systems in place for back office etc. appointed all key personnel, auditors, compliance officers, prepare manual, specified norms etc. 
  • Compliance certificate from AMC *1
  • Consideration of the certificate at a meeting of the Board of trustees and approving the scheme. Minutes to be maintained.

    • Also, additionally, trustees may consider obtaining a compliance report from an independent auditor appointed by the trustee (herein after referred as Independent Internal Auditor - IIA) *2
    18(5) Trustees to ensure that AMC has been diligent in empanelling brokers & in monitoring securities transactions and avoiding undue concentration with any broker. 
  • Basis of empanelment of brokers to be approved by the Board of the AMC and to be ratified by the trustees at their meeting.
  • Compliance certificate from AMC *1
  • Report from IIA *2 
  • Consideration of the same in the meeting of the trustees and maintenance of minutes. Specific attention to be given to deals with any broker associated with sponsor beyond 5% of the quarterly gross business of the mutual fund.
  • Official communication to the AMC by the Board of trustees to rectify deficiencies. 
  • Violation /irregularities to be reported to SEBI immediately. 
    		•
    18(6) Trustees to ensure that AMC has not given undue and unfair advantage to any associate.
  • Report of IIA *2 specifically as to affiliate transactions . Special attention to be given to utilisation of services of sponsor or any associate, employee or relative for any securities transactions and distribution and sale of securities. 
  • commission and brokerage paid to associates to be verified and disclosed in half yearly accounts of the mutual fund. 
  • Review at meeting of trustees and minutes.
    		•
    18(7) Trustees to ensure that transactions entered into by AMC are in accordance with the Regulations  1.Compliance certificate from AMC *1  

    2. Report from IIA *2 

  • Consideration of the same in the meeting of the trustees and maintenance of minutes.
  • Communicate deficiency in writing to the AMC 
  • Violation /irregularities to be reported to SEBI immediately.
  • At the next meeting of Board, review action taken by AMC to rectify the deficiency. 
    		•
    18(13) Trustees to ensure that transactions in mutual fund are in accordance with the trust deed.
  • Compliance certificate from AMC *1
  • Report from IIA *2
  • Consideration of the same in the meeting of the trustees and maintenance of minutes.

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    18(8) Trustees to ensure that AMC has been managing the schemes independent of other activities and have taken adequate steps to ensure that investors of all schemes are not being compromised with those of any other scheme. 
  • Lay down chinese walls beteween various activities and strict internal control procedures..
  • Compliance certificate from AMC *1
  • Report from IIA *2
  • Consideration of the same in the meeting of the trustees and maintenance of minutes.
  • Official communication to the AMC by the Board of trustees to rectify deficiencies. 
  • Violation /irregularities to be reported to SEBI immediately.
    		•
    18(9) Trustees to ensure that all activities of AMC are in accordance with the Regulations
  • Compliance certificate from AMC *1
  • Report from IIA *2
  • Consideration of the same in the meeting of the trustees and maintenance of minutes.
  • Official communication to the AMC by the Board of trustees to rectify deficiencies. 
  • Violation /irregularities to be reported to SEBI immediately.
    		•
    18(16) Trustees to call for details of transactions by key personnel of the AMC and report to SEBI. 1. Prescribe code of ethics. 
  • Compliance certificate from of AMC *1

    • and specific comments of IIA *2 . 

  • Review at meeting of trustees and minutes.
  • Report to SEBI of any irregularity/violation.
    		•
    18(17) Trustees to quarterly review all transactions between the mutual fund, AMC and its associates. 
  • Report from IIA.
  • Affiliate transactions to be justified by AMC and specifically reviewed by trustees. Minutes to be maintained. Nominee of sponsor on the Board of trustees not to participate in the discussions regarding affiliate transactions.
    		•
    18(18) Trustees to review quarterly net worth of AMC on quarterly basis and ensure that the AMC makes up the shortfall. 
  • Obtain quarterly networth statement from the AMC.
  • Call upon sponsor/AMC to meet the shortfall.

    • Report to SEBI of shortfall if any, in networth, of AMC.
    18(19) 

     

    		 Trustees to periodically review all service contracts. 
  • Certificate from AMC as to performance of service providers*1.
  • Report from IIA *2
  • Review at meeting of trustees with specific reference to 
  • payment of repurchase/redemption proceeds within 10 days.
  • reconciliation of funds and securities with custodians.
  • effecting transfer of units to unit holders within 30 days.
  • despatch of dividend warrants within 42days of date of declaration. 
    		•
    18(20) Trustees to ensure that there is no conflict of interest between the manner in which the AMC has deployed its net worth and the interest of the unit holders.  1. Report from IIA*2 

    2. Review at meeting of trustees and minutes.
    18(21) Trustees to periodically review the investor complaints and redressal by AMC.
  • Ensure appointment of SEBI approved intermediary where investor services are outsourced.
  • Certificate from AMC*1 as to the performance of service provider.
  • Report of IIA. 
  • Carry out test checks on investor complaint redressal. 
  • Review at meeting of trustees and minutes.
    		•
    18(14) Trustees to be responsible for calculation of any income due to be paid to the mutual fund, any income received in the mutual fund. 
  • Yearly audit report of the statutory auditors of the Fund/Scheme or at the time of declaration of dividend.
  • Any adverse comments of IIA *2 to be reviewed and action taken.

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    18(11) Trustee to file details of his holding in securities on a half-yearly basis with the trust.  Submit at meeting of board of trustees and minutes.
    18(10) Trustees to take such remedial steps as necessary and inform SEBI of the action taken by the trustees, in case the conduct and business of the mutual fund is not in accordance with the Regulations.
  • Consider issue at the meeting of board of trustees.
  • Inform SEBI of proposed action.
  • Take action against AMC.

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    18(23(a) Trustees to report to SEBI on a half-yearly basis on the activities of the mutual fund. 
  • Half yearly Compliance certificate from AMC.
  • Half yearly report from IIA.
  • Review at meeting of board of trustees and minutes.
  • Report to SEBI.
    		•
    18(23)(b) Trustees to certify to SEBI half-yearly that they have satisfied themselves that there have been no instances of self-dealing or front running by any of the trustees, directors and key personnel of the AMC. 1. Compliance certificate from AMC *1 . 
  • Report from IIA. *2
  • Review at meeting of board of trustees and minutes.
  • Report to SEBI.
    		•
    18(23)(c) Trustees to certify half-yearly that AMC has been managing the schemes independently of any other activities undertaking that the AMC and the unit holders interest has been protected.  1. Compliance certificate from AMC *1 . 
  • Report from IIA. *2
  • Review at meeting of board of trustees and minutes.

    • Report to SEBI.
    18(15) Trustees to obtain unit holders consent under certain circumstances .
  • Consider issue at meeting of Board of trustees.
  • Obtain consent from unitholders .
    		•
    28 (1)  Scheme to be approved by trustees
  • Obtain Due diligence certificate from AMC signed by Managing Director, Compliance Officer ad sponsor nominee director of the Board of the AMC. Obtain due diligence certificate from manager to the offer.
  • Consider and approve the scheme at the meeting of the board of trustees and maintain minutes.
  • Obtain post issue compliance certificate from AMC. Specific attention to given to issue of refund orders, payment of interest where applicable, and despatch of unit certificates within 6 weeks of closure of subscription and listing of schemes as per Scheme offer document. 
  • Obtain report from IIA as to post issue compliance and consider at meeting of board of trustees.

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    60 Trustees to make disclosure to unit holders as are essential to inform about any adverse bearing on investments.
  • Report of IIA*2 as to adverse features.
  • Direct statutory auditor of AMC to make appropriate qualification.
  • Report to the unitholders.

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    Note:

     

    *1 Compliance certificate from AMC to be signed by the Compliance Officer, an Independent Director and the Chairman of the AMC where he is the nominee of the sponsor . If the nominee of the sponsor is not the Chairman, the certificate should also be signed by a nominee of the sponsor.

     

    *2 Report from IIA to be obtained on a half-yearly basis.

      

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