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At least two-thirds of the Board of Trustees of a mutual fund trust must be
A{'text': 'Officers of the Asset Management Company itself', 'label': 'A'}
B{'text': 'Nominees of the appointed Custodian for the scheme', 'label': 'B'}
C{'text': 'Independent trustees not linked to the Sponsor', 'label': 'C'}
D{'text': 'Elected by the unit holders every financial year', 'label': 'D'}
Answer & Solution
Correct answer: C. {'text': 'Independent trustees not linked to the Sponsor', 'label': 'C'}
1. SEBI requires the trustee board to be structured for independence.
2. Where a trustee company is set up, it must have at least 4 directors.
3. At least two-thirds of those directors must be independent of the sponsor.
4. This composition safeguards unit holders against sponsor conflicts of interest.
_Source: NISM Series V-A: Mutual Fund Distributors Workbook (Dec 2019), Ch 3 "Legal Structure of Mutual Funds in India", §3.2.2_
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