NISM V-A Legal and Regulatory Framework — Practice Questions
Questions on SEBI's regulation of mutual funds and distributors: the SEBI (Mutual Funds) Regulations, AMFI's role and code of conduct, KYC and PMLA obligations, and the investor grievance machinery.
69 questions on Legal and Regulatory Framework in the ScoreSetu bank — each with a detailed explanation and, where useful, a memory hook.
What this topic covers
- SEBI (Mutual Funds) Regulations
- AMFI and the code of conduct
- KYC, PMLA and due diligence
- Investor grievance redressal
Free sample questions
1. Which of the following documents can be inspected by unitholders with respect to mutual fund investments?
- A. Memorandum & Articles of Association of the Asset Management Company
- B. Agreement for custodial services
- C. Investment Management Agreement
- D. All the above-mentioned documents ✅
Answer: D — All the above-mentioned documents
Why: Mutual fund unitholders have the right to inspect important legal and operational documents related to the mutual fund. These include the Custodial Services Agreement, Memorandum & Articles of Association of the AMC and the Investment Management Agreement. This ensures transparency and protects investor interests. Therefore, all the given documents can be inspected by unitholders.
💡 Unitholders can inspect ALL key docs -> IMA + Custodial Agreement + AMC's M&A of Association.
2. Identify the INCORRECT statement with respect to SEBI Complaints Redress System (SCORES).
- A. SCORES enables the market intermediaries and listed companies to receive complaints from investors, redress such complaints and report redressal
- B. SCORES is a web-based centralized grievance redress system
- C. SCORES is completely online, so an investor cannot lodge a physical compliant ✅
- D. If an investor lodges a physical complaint then such complaints are scanned and then uploaded in SCORES for processing
Answer: C — SCORES is completely online, so an investor cannot lodge a physical compliant
Why: While SCORES is primarily online, investors can still submit physical complaints to the SEBI office or concerned intermediary. These physical complaints are then scanned and uploaded onto SCORES for further processing. Therefore - 'SCORES is completely online, so an investor cannot lodge a physical compliant' - is incorrect.
💡 SCORES is web-based but PHYSICAL complaints allowed -> scanned & uploaded. 'Fully online' = FALSE.
3. Identify the incorrect statement from the following:
- A. As per AMFI intermediary guidelines, intermediaries do not have the right to appeal before AMFI ✅
- B. Mutual fund distributors should avoid making defamatory remarks against any AMC
- C. Investor awareness is not the sole responsibility of mutual fund distributors
- D. All of these statements are incorrect
Answer: A — As per AMFI intermediary guidelines, intermediaries do not have the right to appeal before AMFI
Why: Statement A is incorrect — Under AMFI guidelines, if any action is taken against an intermediary (such as suspension or cancellation of ARN), the intermediary does have the right to appeal to AMFI. AMFI provides a proper grievance and appeal mechanism for intermediaries Statement B is correct as AMFI's code of conduct strictly prohibits MF distributors from making any defamatory or derogatory statements against any AMC, which would be considered a serious violation of professional ethics. Statement C is correct as investor awareness is a shared responsibility among AMFI, AMCs, distributors, and SEBI — no single entity bears sole responsibility.
💡 Intermediaries DO have a right to appeal to AMFI -> stmt A is INCORRECT.
Practise all 69 Legal and Regulatory Framework questions
Plus the full 743-question NISM V-A bank and real-feel mock exams.