1. Sponsor:

• The sponsor is the person or entity that establishes the mutual fund.

• They are responsible for setting up the mutual fund and appointing the trustee and asset management company (AMC).

• The sponsor must approach the Securities and Exchange Board of India (SEBI) for approval to set up the mutual fund.

2. Public Trust:

• After SEBI approval, the sponsor creates a public trust under the Indian Trusts Act, of 1882.

• The trust is a legal entity that holds the mutual fund's assets for the unit holders.

• The trust deed is a legal document that outlines the terms and conditions of the trust, including the rights and responsibilities of the trustee, sponsor, and unit holders.

3. Trustee:

• The trustee is appointed by the sponsor to manage the trust and ensure that the mutual fund is managed according to its objectives.

• The trustee is responsible for monitoring the AMC's activities and ensuring that they are in line with the investment objectives of the mutual fund.

• The trustee is also responsible for ensuring that the mutual fund's assets are safe and secure.

4. Asset Management Company (AMC):

• The AMC is appointed by the trustee to manage the mutual fund's portfolio and securities.

• The AMC is responsible for investing the mutual fund's assets in various securities, such as stocks, bonds, and other instruments.

• The AMC must be approved by SEBI and must have at least 50% independent directors on its board.

5. Custodian:

• The custodian is responsible for holding the mutual fund's securities in safe custody.

• The custodian is appointed by the trustee, and is responsible for ensuring that the securities are properly held and transferred.

6. Registrar and Transfer Agent (RTA):

• The RTA is responsible for maintaining the mutual fund's records, including the register of unit holders.

• The RTA is also responsible for issuing and redeeming units, as well as distributing dividends and other payments to unit holders.

7. Fund Accountant:

• The fund accountant is responsible for maintaining the mutual fund's accounts and preparing its financial statements.

• The fund accountant is appointed by the AMC, and is responsible for ensuring that the mutual fund's accounts are accurate and comply with relevant regulations.

8. Auditor:

• The auditor is responsible for auditing the mutual fund's accounts and ensuring they are accurate and comply with relevant regulations.

• The auditor is appointed by the AMC, and must be approved by SEBI.

9. Brokers and Dealers:

• Brokers and dealers are responsible for buying and selling securities on behalf of the mutual fund.

• They must be registered with SEBI and must comply with relevant regulations.

10. Intermediaries:

• Intermediaries, such as distributors and agents, are responsible for selling the mutual fund's units to investors.

• They must be registered with SEBI and must comply with relevant regulations.

The structure of a mutual fund in India comprises several key entities, each with distinct responsibilities. The sponsor initializes the mutual fund, while the trustee oversees its operations. The Asset Management Company (AMC) manages the fund's investments, and the custodian safeguards its assets. The Registrar and Transfer Agent (RTA) handles investor servicing and record-keeping, and the fund accountant prepares the fund's financial statements. Regular audits are conducted by the auditor, brokers, dealers, and intermediaries to facilitate buying and selling of mutual fund units. Together, these entities ensure the mutual fund operates efficiently, and compliance with relevant regulations. 

Regulation of mutual funds

• The Securities and Exchange Board of India (SEBI) is the primary regulator of mutual funds in India.

• SEBI is responsible for protecting investors and also ensuring the mutual fund industry operates openly and honestly.

• Mutual funds in India are organized as trusts and have a three-tier structure consisting of the fund sponsor, trustees, and asset management company (AMC).

• The Unit Trust of India was established in 1963, marking the beginning of the mutual fund business in India.

• SEBI has created policies to regulate the mutual fund industry in India, including:
  • SEBI (Mutual Funds) Rules, 1996
  • SEBI (Mutual Funds) Rules, 2020
  • Categorization and Rationalization of Mutual Fund Schemes

Here are some of the other regulations for mutual funds in India:

1. Corporate Structure:

• Asset Management Company (AMC) must have at least 50% independent directors.

• The board of trustees must have at least 50% independent trustees.

• Custodians must be separate from the AMC and trustees.

2. Sponsor Eligibility:

• SEBI evaluates the sponsor's track record, integrity, and financial soundness before granting permission.

3. Scheme Particulars:

• Scheme details must be vetted by SEBI.

4. Advertising Code:

• Mutual funds must adhere to a code of advertisement.

5. Minimum Corpus:

• Open-ended scheme: ₹50 crores.

• Closed-ended scheme: ₹20 crores.

6. Investment Timeline:

• Funds raised from schemes must be invested within nine months.

7. Money Market Investments:

• Maximum 25% of the corpus in money market instruments during the first six months.

• Maximum 15% after six months.

8. Annual Inspection:

• SEBI inspects mutual funds annually to ensure compliance with regulations.

These regulations, aim to ensure that mutual funds operate transparently, with adequate risk management and investor protection.

Before investing in mutual funds, investors should:
• Analyze their financial situation and investment objectives
• Research different types of mutual fund schemes
• Diversify their investments
• Avoid accumulating too many investments at once
• Determine the appropriate investment duration based on their investment objectives and risk profile.