The rule-heavy chapter: SEBI (Mutual Fund) Regulations, 1996, and the approvals, timelines, and investor-protection rules built on it.
The entire Indian mutual fund industry operates under the SEBI (Mutual Fund) Regulations, 1996, supplemented by ongoing SEBI circulars that update specific rules over time.
This chapter is rule-dense and carries high weightage precisely because it tests exact conditions, timelines, and thresholds rather than broad concepts.
Sponsor eligibility requires a track record of at least five years in the financial services business, positive net worth in each of the preceding five years - not merely "most" years, a frequently mixed-up detail - and a "fit and proper person" clearance.
AMC eligibility layers on its own conditions: minimum net worth of Rs 50 crore, professional competence of key personnel, and adequate systems and infrastructure.
Before launching a new scheme, the AMC must file a draft offer document (the SID) with SEBI, incorporate any observations SEBI raises, and only then can the scheme be opened for subscription through its NFO.
Exact filing-day counts for observations or launch windows are occasionally cited informally in study material; treat any specific day-count claim as something to verify against the current regulation text rather than memorise from an unverified source.
A scheme's "fundamental attributes" - its investment objective, terms of investment (load structure, liquidity provisions), and structure - can only be changed after giving existing investors written notice and a mandatory 30-day exit window with no exit load charged.
This is one of the most frequently tested single facts in the whole syllabus, because it sits at the intersection of regulation and investor protection.
A scheme can be wound up in three ways: by SEBI's direction (in the interest of investors), by the Trustees' decision with SEBI's prior approval, or through unitholder approval representing at least 75% of the scheme's value.
Once a decision to wind up is made, the scheme must be wound up within a prescribed period and the proceeds distributed to unitholders.
SEBI regulations cap how much a scheme can invest in a single company, a single sector, or unlisted securities, to prevent excessive concentration risk.
Exact percentage caps vary by scheme category and are revised periodically - worth reviewing directly from the current regulation text rather than a fixed number that may go stale.
Memory hook
Core features change -> investors get a free 30-day exit door, no load charged.
Independent study aid by Ramaniya, based on the syllabus of the National Institute of Securities Markets (NISM) - not an official NISM publication.
