What is the statutory minimum continuous net-worth requirement for an Asset Management Company (AMC) in India, and what proportion of its board must be independent?

[ A ]Net-worth of not less than Rs. 10 crore, with at least 10% independent directors

[ B ]Net-worth of not less than Rs. 100 crore, with 100% of directors appointed by unitholder voting

[ C ]Net-worth of not less than Rs. 1 crore, with no restriction on sponsor executive appointments

[ D ]Net-worth of not less than Rs. 50 crore, with at least 50% of directors being non-associates of the sponsor or trustees[ CORRECT ]

Takeaway

Option D is correct: Net-worth of not less than Rs. 50 crore, with at least 50% of directors being non-associates of the sponsor or trustees

Derivation

As per SEBI (Mutual Funds) Regulations, an Asset Management Company (AMC) must maintain a continuous net-worth of not less than Rs. 50 crore deployed in specified assets. Furthermore, the board of directors of the AMC must comprise at least 50% independent directors who are not associates of the sponsor, any of its subsidiaries, or the trustees. This question evaluates the statutory capital and governance requirements for AMCs. A common mistake is confusing the AMC net worth of Rs. 50 crore with the historical Rs. 10 crore threshold.

Why the others fail

A — Net-worth of not less than Rs. 10 crore, with at least 10% independent directors

Rs. 10 crore was an older historical requirement; current SEBI regulations mandate a continuous net worth of at least Rs. 50 crore and 50% board independence.

B — Net-worth of not less than Rs. 100 crore, with 100% of directors appointed by unitholder voting

SEBI sets AMC net worth at Rs. 50 crore, not Rs. 100 crore, and AMC directors are not appointed via unitholder voting.

C — Net-worth of not less than Rs. 1 crore, with no restriction on sponsor executive appointments

Rs. 1 crore is inadequate for AMC registration and unconstrained sponsor executive boards are prohibited by SEBI independence rules.