Page 241 - DCOM507_STOCK_MARKET_OPERATIONS

Stock Market Operations

Notes 2. Authorized capital of AMC: The primary objective of setting up of an AMC is to manage
the assets of the mutual funds and other activities, which it can carry out, such as, financial
services consultancy, which do not conflict with the fund management activity and are
only secondary and incidental. That being so, it may not be practical to expect a company
to be set up with a paid up capital of `5 crore to carry on only incidental activities, without
any assurance of its receiving an approval from SEBI to act also as an Asset Management
Company for a Mutual Fund. There should, therefore, not be any objection in registering
an AMC if the authorized capital of such a company is approved by SEBI. Major players
who help in running a mutual fund are as follows:
(a) Registers and Transfer Agents:
Their major responsibilities include:
(i) Receiving and processing the application form of a mutual fund

(ii) Issuing of unit/share certificates on behalf of mutual fund
(iii) Maintain detailed records of unit holders transactions
(iv) Purchasing, selling, transferring and redeeming the Unit/Share Certificates
(v) Issuing of income/dividend warrants, broker cheques etc.

(vi) Creating security interest on units/certificates for allowing loans against them
(b) Advertiser
Major responsibilities of an advertiser include:
(i) Helping mutual funds organizers to prepare a media plan for marketing the
fund.
(ii) Issuing/buying the space in newspapers and other electronic media for
advertising the various features of a fund.
(iii) Arranging or hoardings at public places.
(c) Advisor/manager:
It is generally a corporate entity that does the following jobs:

(i) Professional advice on the fund’s investments,
(ii) Advice on asset management services.
(d) Trustees:
Trustees provide the overall management services and charge management fee.

(e) Custodian:
A custodian is again a corporate body that carries out the following functions:
(i) Holds securities
(ii) Receives and delivers securities

(iii) Collects income/interest/dividends on the securities
(iv) Holds and processes cash
Besides the above, other players are as under:
(i) Fund Administrator;

(ii) Fund Accounting Services;

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