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11.'' At least 50% of AMC director are independent and in the case of trustee, two-thirds are independent.'' In this context, explain the role of sponsor in relation to the Trustees and Fund Managers.
Ans: Sponsors play the main role in the establishment of a Mutual Fund Trust. The sponsor should locate and appoint both the Trustee and the Fund Managers as also the Board of Trustees.The Sponsor should incorporate as Asset Management Company too. The Sponsor has to submit to SEBI the drafts of the Trust Deed for the creation of Mutual Fund Trust with particular of the persons, from both the Sponsor Company and outsiders , who gave consent to be the Trustees. It has also to submit draft Memorandum and Articles of Association of Asset Management Company to SEBI with particular of Directors , i.e., the persons to be appointed from the Sponsor's Board and those to be taken from outside . It has also to suggest the name and particular of the Custodians to be engaged for the Mutual Fund. Once SEBI authorizes the Mutual Fund Trust, the role of the Sponsor diminishes; thereafter, it is the Trust that will interact with the SEBI.