Synopsis
The regulator said the net worth of the AMC would have to be maintained until the time it makes a profit for five consecutive years.
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The Securities and Exchange Board of India (Sebi) Wednesday paved the way for technology startups to enter the mutual fund business by waiving the profitability requirement, approved doing away with minimum promoter contribution toward follow-on public offers (FPO), and also eased norms on investing in insolvent companies.
“To facilitate innovation and enhanced reach to more investors at a faster pace including tech-enabled solutions, sponsors that are not fulfilling profitability criteria at the time of making the application, shall also be considered eligible to sponsor a mutual fund subject to having a net worth of not less than Rs 100 crore for the purpose of contribution toward the net-worth of the asset management company (AMC),” Sebi said Wednesday after its board meeting.