1.1 The SEBI circular has made registration of Intermediaries compulsory. This would mean that no person or any other entity would be entitled to sell units of mutual funds unless the Intermediary is registered with AMFI. AMFI has made provision for issuing an AMFI Registration Number (ARN) and photo-identity card for Intermediaries. All mutual funds shall stop empanelling Intermediaries who are not registered with AMFI with effect from the date of these Guidelines.

1.2 For Intermediaries already empanelled with mutual funds, being registered with AMFI shall become compulsory by March 31^st, 2003. Thereafter, no brokerage can be paid out to Intermediaries who are not registered with AMFI on fresh business canvassed by them until such time as they are registered.

1.3 All corporate Intermediaries shall ensure that employees engaged in sales and marketing of mutual funds are registered with AMFI and have obtained a photo identity card.

1.4 AMFI certification is the sole criteria for allotting an ARN to an individual Intermediary, other than those specifically exempted, who shall follow the procedure detailed in 2.1.2 below. Corporate Intermediaries can obtain an ARN by undertaking to ensure that all personnel engaged in sales and marketing pass the AMFI certification test and register with AMFI and obtain a photo-identity, with their corporate ARN, by March 31^st, 2003 in the case of existing Intermediaries and their existing employees.

1.5 For corporate Intermediary entering the business of mutual fund sales after the date of these guidelines, and for persons hired by existing intermediaries, all such employees proposed to be engaged in the sales and marketing of mutual funds, shall have to be registered with AMFI. In the case of a fresh corporate entrant to the intermediation industry, this would mean that despite obtaining an ARN it would not be able to do business till the first employee recruited for sales/marketing holds AMFI certification and all subsequent employees recruited for engaging in sales/marketing are also registered with AMFI and have obtained his/her photo identity card.

1. Individual Applicants
:


1. An individual must complete the appropriate form and enclose a photograph of the size defined in the application form, and a self-certified copy of either the AMFI certificate or mark-sheet as proof of having passed the AMFI Certification Test.



2. The SEBI circular under reference has exempted senior citizens, i.e. individuals who have completed 60 years of age as on March 31, 2003. Such applicant shall enclose proof of age and a recommendation from a member AMC (s), certifying that he/she has worked for 2 years as an intermediary and has canvassed a minimum business of Rs.200,000 over a period of the last 2 years.



3. The prescribed fees can be paid either by a demand draft or by a local cheque in favour of the "Association of Mutual Funds in India" payable at the location of the CAMS office to which the form is submitted. The prescribed fees are as under:


1. For individual Intermediaries as well as for each employee of a corporate Intermediary, the prescribed fees are Rs.500/- (which may be amended from time to time by AMFI). This fee has to be paid every time the individual renews his/her registration.


2. Non-individual Applicants
:


1. Non-individual applicants shall submit the form duly completed along with memorandum and articles of association in the case of companies, partnership deed in the case of partnership firms, society registration documents in the case of societies and trust deed in the case of trusts. The list of authorized signatories shall also be submitted.



2. The prescribed fees in the case of public limited companies are Rs.15,000/- and in the case of others are Rs.1000/-. The non-individual applicant must however ensure that each employee engaged in sales or marketing has applied for and obtained a photo-identity card on or before March 31, 2003.



3. After March 31, 2003, no employee of an intermediary can engage in the sales and marketing of mutual fund products unless he/she has obtained a photo-identity card.

3.1 All individual ARMFA obtaining empanelment with an AMC would be required to have at least 12 investors with the empanelling AMC, within one year of empanelment or, in the case of ARMFA already empanelled, within one year from the date of this circular. Failing this, the ARMFA would have to provide an undertaking to the AMC that it services at least 25 investors across all mutual funds. Failing both the above, the ARMFA would not be entitled to receive brokerage from the AMC on the mobilization done by it during the subsequent year, until it complies with the above.

3.2 Corporate ARMFA obtaining empanelment with an AMC would be required to have at least 100 investors from non-associates as defined herein, within one year of empanelment or, in the case of ARMFA already empanelled, within one year from the date of this circular OR

3.3 Would have average assets under management of at least Rs.1 crore with the empanelling AMC, which are not from associates (being subsidiary and holding companies) within the period stipulated in 3.2 above.
3.4 During a twelve-month period after empanelment, if 75% or more of the gross funds mobilized for the empanelling AMC by a corporate ARMFA, is from associates, the ARMFA would be required to provide a certificate signed by the authorized person, that it services at least 200 investors, other than associates and/or employees of associates, during the said period.

3.5 ARMFA are empanelled at different points of time. Monitoring on an on-going basis from the date of empanelment would be administratively inconvenient. Therefore following empanelment of an ARMFA, the AMC would be required to monitor compliance of the criteria in 3.1 to 3.4 during the quarter after completion of 12 months of empanelment. Thereafter monitoring of compliance with the criteria shall be done at the end of every 12 month period following the previous verification of compliance.

4.1 For the purpose of empanelment, a corporate ARMFA would have to provide a letter from the Chairman/ Managing Director/ CEO/Authorized persons confirming that the organization was authorized to undertake distribution of mutual funds.

4.2 After the close of the current financial year (on March 31, 2003), AMCs would be required to obtain a one-time certificate from the corporate ARMFA and other non-individual ARMFA (structured sole proprietor firms, partnership firms, societies, trusts, co-operatives, etc.), empanelled with them, containing their ARN and certifying that as on March 31^st, 2003 all employees engaged in sales or marketing have obtained AMFI certification and have obtained or applied for AMFI registration and obtaining their photo-identity card.

4.3 AMCs (or Registrars on behalf of AMCs) would obtain once a year, a certificate from empanelled Intermediaries as to their having complied with these guidelines and the code of conduct.

4.4 Similarly Principal Intermediary would be required to obtain a certificate from their sub-brokers.

4.5 The wording of the said certificate would be



"This is to certify that, in the course of my/our business in the distribution of mutual fund products during the financial year ended March 31,…….. I/we have adhered to the Code of Conduct contained in SEBI circular no. MFD/CIR/06/210/2002 dated June 26, 2002 and to the requirements as prescribed in SEBI’s subsequent circular no. MFD/CIR/20/23230/2002 dated November 28, 2002 and the AMFI circular no: CIR/ARN-01/02-03 dated January 15, 2003 in this regard."

"I/we have understood the details of the scheme and I/we have not received nor been induced by any rebate or gifts, directly or indirectly, in making this investment."