Regulation 16 - Disqualification from being appointed as trustees - Securities and Exchange Board of India (Mutual Funds) Regulations, 1996

Disqualification from being appointed as trustees 16. (1) A mutual fund shall appoint trustees in accordance with these regulations. (2) No person shall be eligible to be appointed as a trustee unless- (a) he is a person of ability, integrity and standing; and (b) has not been found guilty of moral turpitude; and (c) has not been convicted of any economic offence or violation of any securities laws; and (d) has furnished particulars as specified in Form C. (3) 1 [No asset management company and no director (including independent director), officer or employee of an asset management company shall be eligible to be appointed as a trustee of any mutual fund.] (4) 2 [No person who is appointed as a trustee of a mutual fund shall be eligible to be appointed as a trustee of any other mutual fund 4 [ . ] 5 [ **** ] ] 3 [(5) Two-thirds of the trustees shall be independent persons and shall not be associated with the sponsors or be associated with them in any manner whatsoever.] (6) In case a company is appointed as a trustee then its directors can act as trustees of any other trust provided that the object of the trust is not in conflict with the object of the mutual fund. 6 [ (7) In case a company is appointed as the trustee of a mutual fund, the Chairperson of the board of directors of that trustee company shall be an independent director: Provided that a trustee company, already appointed as the trustee of a mutual fund shall comply with this sub-regulation within a period as may be specified by the Board from time to time. ] ************** NOTES:- 1 Substituted by the SEBI (Mutual Funds) (Fifth Amendment) Regulations, 2006, w.e.f. 21-12-2006. Prior to its substitution, sub-regulation (3) read as under; (3) An asset management company or any of its officers or employees shall not be eligible to act as a trustee of any mutual fund. 2 Substituted by the SEBI (Mutual Funds) (Fifth Amendment) Regulations, 2006, w.e.f. 21-12-2006. Prior to its substitution, sub-regulation (4) read as under; (4) No person who is appointed as a trustee of a mutual fund can be appointed as a trustee of any other mutual fund unless- (a) such a person is an independent trustee referred to in sub-regulation (5); and (b) prior approval of the mutual fund of which he is a trustee has been obtained for such an appointment. 3 Substituted by the SEBI (Mutual Funds) (Amendment) Regulations, 1998, w.e.f. 12-1-1998. Prior to its substitution, sub-regulation (5) read as under; Atleast 50% of the trustees shall be independent persons and no such trustee shall be an associate or a subsidiary or associated in any manner with the sponsor. 4. Substituted vide Notification No. SEBI/LAD-NRO/GN/2021/08 dated 04-02-2021 w.e.f. 30th day from the date of their publication in the Official Gazette, that is 04-02-2021 before it was read as : 5. Omitted vide Notification No. SEBI/LAD-NRO/GN/2021/08 dated 04-02-2021 w.e.f. 30th day from the date of their publication in the Official Gazette, that is 04-02-2021 before it was read as Provided that any mutual fund which is not in compliance with sub-regulation (3) or (4) as at the commencement of the Securities and Exchange Board of India (Mutual Funds) (Fifth Amendment) Regulations, 2006 shall ensure compliance therewith within three months from such commencement. 6. Inserted vide Notification No. SEBI/LAD-NRO/GN/2023/134 dated 26-06-2023 w.e.f. 01-01-2024