NISM V-B Legal Structure of Mutual Funds — Practice Questions
Practise the three-tier structure of an Indian mutual fund — sponsor, trustees and AMC — and the roles of the custodian, RTA, auditors and distributors, with the eligibility and net-worth rules the exam tests.
24 questions on Legal Structure in the ScoreSetu bank — each with a detailed explanation and, where useful, a memory hook.
What this topic covers
- Sponsor, trustee and AMC
- Custodian and RTA
- Eligibility and net-worth rules
- Roles of other constituents
Free sample questions
1. The same auditor can audit the AMCs accounts as well as a schemes accounts - State True or False ?
- A. True
- B. False ✅
Answer: B — False
Why: The scheme's accounts are audited by an auditor, who needs to be different from the auditor of the AMC.
💡 Scheme auditor must be DIFFERENT from the AMC's auditor.
2. The operations of the mutual fund trust are governed by a Trust Deed, which is executed by the _________ .
- A. Trustees
- B. Sponsors ✅
- C. AMC
- D. All of the above
Answer: B — Sponsors
Why: A mutual fund is constituted as a trust. The operations of the mutual fund trust are governed by a Trust Deed, which is executed between the sponsors and the trustees; the sponsor is the entity that sets up the trust. SEBI has laid down the clauses that must form part of the Trust Deed. The AMC is appointed later by the trustees and does not execute the deed.
💡 Trust Deed is executed by the SPONSOR -> creates the MF trust that trustees then run.
3. The Custodian of a Mutual Fund scheme is appointed by the _______ .
- A. Trustees ✅
- B. Sponsors
- C. AMC
- D. Fund Manager
Answer: A — Trustees
Why: Although the AMC manages the schemes, custody of the assets of the scheme (securities, gold, gold-related instruments & real estate assets) is with a Custodian, who is appointed by the trustees.
💡 Custodian is appointed by the TRUSTEES; holds the scheme's assets.
Practise all 24 Legal Structure questions
Plus the full 369-question NISM V-B bank and real-feel mock exams.