Regulation 21 - Rights and obligations of the trustee - Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999

Rights and obligations of the trustee 21. (1) The trustee shall have a right:- (a) to obtain from the Collective Investment Management Company such information as is considered necessary by the trustee. (b) to inspect the books of account and other records relating to the 1 [collective investment scheme]. (2) The trustee shall ensure that the Collective Investment Management Company has:- (a) the necessary office infrastructure; (b) appointed all key personnel including managers for the 2 [collective investment scheme] and submitted their bio-data which shall contain the educational qualifications and past experience in the areas relevant for fulfilling the objectives of the 3 [collective investment scheme]s; (c) appointed auditors to audit the accounts of the 4 [collective investment scheme] from the list of auditors approved by the Board; (d) appointed a compliance officer to comply with the provisions of the Act and these regulations and to redress investor grievances; (e) appointed registrars to an issue and share transfer agent; (f) prepared a compliance manual and designed internal control mechanisms including internal audit systems; (g) taken adequate insurance for the assets of the 5 [collective investment scheme]; (h) not given any undue or unfair advantage to any associates of the company or dealt with any of the associates in any manner detrimental to the interest of the unit holders; (i) operated the 6 [collective investment scheme] in accordance with the provisions of the trust deed, these regulations and the offer document of the 7 [collective investment scheme](s); (j) undertaken the activity of managing 8 [collective investment scheme]s only; (k) taken adequate steps to ensure that the interest of investors of one 9 [collective investment scheme] are not compromised with the object of promoting the interest of investors of any other 10 [collective investment scheme]; (l) minimum networth on a continuous basis and shall inform the Board immediately of any shortfall; (m) been diligent in empanelling the marketing agents and in monitoring their activities. (3) Where the trustee has reason to believe that the conduct of business of the 11 [collective investment scheme] is not in accordance with these regulations, trust deed and the offer document of the 12 [collective investment scheme], the trustee shall forthwith take such remedial steps as are necessary and shall immediately inform the Board of the action taken. (4) The trustee shall be accountable for, and be the custodian of, the funds and property of the respective 13 [collective investment scheme] and shall hold the same in trust for the benefit of the unit holders in accordance with these regulations and the provisions of trust deed. (5) The trustee shall be responsible for the calculation of any income due to be paid to the 14 [collective investment scheme] and also for any income received in the 15 [collective investment scheme] to the unit holders. (6) The trustee shall convene a meeting of the unit holders- (a) whenever required to do so by the Board in the interest of the unit holders; or (b) whenever required to do so on the requisition made by unitholders holding at least one-tenth of nominal value of the unit capital of any 16 [collective investment scheme]; or (c) when any change in the fundamental attributes of any 17 [collective investment scheme] Provided that no such change shall be carried out unless the consent of unit holders holding at least three-fourths of nominal value of the unit capital of the 18 [Collective investment scheme] is obtained. Explanation :- For the purposes of this clause fundamental attributes means the investment objective and terms of a 19 [collective investment scheme]. (7) The trustee shall review : (a) on a quarterly basis (i.e., by the end of March, June, September and December) every year all activities carried out by the Collective Investment Management Company; (b) periodically all service contracts relating to registrars to an issue and share transfer agents and satisfy itself that such contracts are fair and reasonable in the interest of the unit holders; (c) investor complaints received and the redressal of the same by the Collective Investment Management Company. (8) (i) The trustee shall ensure that:- (a) net worth of Collective Investment Management Company is not deployed in a manner which is detrimental to interest of unit holders; (b) property of each 20 [collective investment scheme] is clearly identifiable as 21 [collective investment scheme] property and held separately from property of the Collective Investment Management Company and property of any other 22 [collective investment scheme]; (c) clearances or no objection certificate is obtained, in respect of transactions relating to property of the 23 [collective investment scheme] from such authority as is competent to grant such clearance or no objection certificate. (ii) The trustee shall abide by the Code of Conduct as specified in the Third Schedule. (9) The trustee shall furnish to the Board on a quarterly basis (i.e., by end of March, June, September and December), every year- (a) a report on the activities of the 24 [collective investment scheme]; (b) a certificate stating that the trustee has satisfied himself that affairs of the Collective Investment Management Company and of the various 25 [collective investment scheme] are conducted in accordance with these regulations and investment objective of each 26 [collective investment scheme]. (10) The trustee shall cause:- (a) the profit and loss accounts and balance sheet of the 27 [collective investment scheme] to be audited at the end of each financial year by an auditor empanelled with the Board. (b) each 28 [collective investment scheme] to be appraised at the end of each financial year by an appraising agency. (c) 29 [collective investment scheme] rated by a credit rating agency. (11) A meeting of the trustees to discuss the affairs of the 30 [collective investment scheme] shall be held at least twice in every three months in a financial year. (12) The trustee shall report to the Board any breach of these regulations and has had, or is likely to have, a materially adverse effect on the interests of unit holders as soon as they become aware of the breach. (13) The trustee shall ensure that- (a) the fees and expenses of the 31 [collective investment scheme] are within the limits as specified in Part I of the Ninth Schedule; (b) accounts of the 32 [collective investment scheme]s are drawn up in accordance with the accounting norms as specified in Part II of the Ninth Schedule. (c) accounts of the 33 [collective investment scheme] comply with the format of the balance sheet and the profit and loss account as specified in Part III of the Ninth Schedule. ************* NOTES:- 1 ibid. 2 ibid. 3 ibid. 4 ibid. 5 ibid. 6 ibid. 7 ibid. 8 ibid. 9 Substituted by the SEBI (Collective Investment Schemes) (Amendment) Regulations, 2014, w.e.f. 9-1-2014. 10 ibid. 11 ibid. 12 ibid. 13 ibid.. 14 ibid. 15 ibid.. 16 ibid. 17 ibid. 18 ibid. 19 ibid. 20 Substituted by the SEBI (Collective Investment Schemes) (Amendment) Regulations, 2014, w.e.f. 9-1-2014. 21 ibid. 22 ibid. 23 ibid. 24 ibid. 25 ibid. 26 ibid. 27 ibid. 28 ibid. 29 ibid. 30 ibid. 31 ibid. 32 ibid. 33 Substituted by the SEBI (Collective Investment Schemes) (Amendment) Regulations, 2014, w.e.f. 9-1-2014.