A mutual fund is set up in the form of a trust, which has Sponsor, Trustees, Asset Management Company (AMC) and Custodian.

a) The Trust is established by a sponsor or more than one sponsor who is like promoter of a company. The Trust is to be registered under the Indian Trust Act 1882

b) The Trustees of the mutual fund hold its property for the benefit of the unit holders.

c) Asset Management Company (AMC) approved by SEBI manages the funds on behalf of its Unitholders, by making investments in various types of securities. The AMC is registered under the Companies Act.

d) Custodian, who is registered with SEBI, holds the securities of various schemes of the fund in its custody.

The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of SEBI Regulations by the mutual fund.

SEBI Regulations require that at least two thirds of the directors of trustee company or board of trustees must be independent i.e. they should not be associated with the sponsors. Also, 50% of the directors of AMC must be independent. All mutual funds are mandatorily required to be registered with SEBI before they launch any scheme.