AMFI revises AUM transfer norms

By Ravi Samalad |  21-07-20 | 
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Ravi Samalad is Assistant Manager - Editoral for

Association of Mutual Funds in India (AMFI) has revised the AUM transfer norms with effect from August 1, 2020. Here is a summary of the important guidelines to remember.

ARN code change initiated by investor

Investors don’t need to obtain no objection certificate from existing distributor to change a distributor or switch to direct plans. The new distributor is not entitled to get trail commission, except for cases where the erstwhile distributor has voluntarily discontinued the business.

ARN change initiated by existing distributor

Change in ARN code will be done only in the following circumstances:

  • Change in the name/legal status of the distributor (such as an individual MF distributor converting his MF distribution business to a partnership firm, a partnership firm converting itself into Limited Liability Partnership (LLP), a private limited company converting itself into a public limited company or vice versa. The transferee distributor is entitled to get trail commission at the same commission rate of the transferor distributor.
  • Mergers/acquisitions/consolidation of business/ transfer of business/demergers/dissolution of business/change in partnership firms or LLP/new code acquired by the distributors (ARN Holders). The transferee distributor is entitled to get trail commission the same commission rate of the transferor distributor.
  • A sub-distributor under needs to transfer the entire AUM to principal ARN holder. In this case, the transferee distributor will get commission basis the lower of the commission rate of the transferor and the transferee distributor.

Important formalities

  • Transfer should be of full assets and after the transfer, the transferor distributor shall cease to operate and his/her ARN code shall be surrendered to AMFI for cancellation.
  • If the transferor distributor does not surrender ARN and becomes a sub-distributor under transferee distributor in order to service the clients, the transferor distributor shall not do business directly with AMCs.
  • Any transferor distributor who has surrendered his valid ARN in order to obtain a fresh ARN/EUIN, shall be considered eligible to transfer his assets to the fresh ARN, even if on the date of application for transfer of AUM, the transferor ARN is “surrendered / not valid”. Provided that the application for transfer of AUM should be made within a period of six months from the date of the cancellation of ARN.

Transfer of AUM of a deceased MF distributor to the ARN of the nominee/ legal heir of the deceased

What has changed?

AMFI has done away with the requirement of getting client consent before transferring assets of a deceased MFD to the nominee ARN holder as this was posing a challenge to the legal heir. The nominee of the deceased ARN holder still needs to have a valid ARN.

The process to cancel the ARN of the deceased ARN holder

  • The nominee ARN holder has to submit an application to the CAMS unit of AMFI within six months from the demise. The death certificate of the deceased distributor duly attested by a Notary or by a gazetted officer and the ARN card of the deceased ARN holder needs to be presented to AMFI.
  • After getting a confirmation from CAMS, the nominee has to approach the respective AMCs to transfer the assets to his/her ARN.
  • The nominee then has to inform all the clients by email or letter about the change in the ARN and if clients have any objection, they must reach out to respective AMCs directly within 15 days.

Change in ARN code due to voluntary cessation of business by an MF distributor

  • The distributor has to inform all his/her clients about the decision to discontinue business and advise them that they may opt to change their distributor of their choice. The distributor has to also inform clients that they have to write to the respective AMCs to update the ARN number of their new distributor in their records. The distributor has to share a copy of this communication to the respective AMCs along with the full list of clients serviced under that AMC.
  • If the ARN is not renewed within three months, AMCs may write to clients to choose another distributor for servicing and inform the AMC to change the ARN code in the client’s’ folios or switch to direct plan.
  • If the ARN is not renewed within six months, the ARN shall be cancelled. No fresh business shall be accepted under such ARN.
  • The trail commission will be paid to the new distributor. No other incentive shall be paid.
  • The distributor must surrender the ARN to AMFI for cancellation, with a copy of the letter submitted to the AMCs (with AMC acknowledgement thereon) as soon as his details are removed from the investors’ folios in the AMCs’ records.
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Ankita Maheshwari
Sep 29 2021 04:27 AM
 I am sub broker of Karvy .as we all know that Nse has announced the bid to transfer the mutual fund AUM of Karvy .hence I am worried to know about the future trail commission of sub brokers ....will I get the same from the new buyer of the Karvy business......pls update about this ...
shuchi gupta
Jan 14 2021 04:51 AM
 In case of a deceased AUM can it be transferred to ARN with blood relation with nominees consent, if the nominee is old enough and not able to obtain ARN or work as an advisor.
Yogesh Laddha
Nov 9 2020 04:28 AM
 Regarding AUM Transfer :-
If any ARN Holder have given the Full AUM Transfer request to his Own Sub Broker Code with Any Corporate ARN where his EUIN is used & in which 8 AMCs AUM have already full transferred but 4 AMCs are still pending to be transferred. 8 AMCs where AUM has been transferred, ARN has got consolidated with the Target ARN. So no Direct ARN business is allowed.

Concern :-
1. No Objection that AUM has been transferred, But can ARN Holder do business in his own ARN Directly as He has transferred the AUM in his Own Sub Broker Code where his Own ARN is being used as Sub Broker.

As Per AMFI Circular, It is not allowed but It must be allowed as Advisor service is Continue.

2. Can ARN be De-Consolidate Again if Advisor wants to start the Business Again ?

3. If Old ARN is Consolidated, Can the Advisor apply for the New ARN as His Own ARN has already been Consolidated & No Business is allowed there.

4. Can anyone contact me for more query.
Ravi Samalad
Jul 22 2020 08:24 PM
 Hi Kingsuk,

Yes, the SIP amount will be counted in your AUM.

Also, you will get trail commission on new SIP installments after change of ARN code as this is treated as a fresh business. You won't get trail on SIP installments which was sourced by old ARN or earlier distributor.

Trust this clarifies.

Ravi Samalad
Kingsuk Kundu
Jul 22 2020 08:02 PM
 Hi Ravi,

Thanks for your advice. Please do let me know if the client's current SIP amount will be counted in my AUM!
Ravi Samalad
Jul 22 2020 02:47 PM
 Hi Kingsuk,

In this case, you will not be entitlted to get trail commission. If the investor stops the SIP and starts a new SIP under your ARN, you will get trail. You wont get trail on old assets of the erstwhile distributor.

Trust this helps.

Ravi Samalad
Kingsuk Kundu
Jul 22 2020 03:18 AM
 My investor has two existing SIP done through IDBI Bank which are more than 1 year old, if I transfer the ARN to my name and the SIP continues, will I get the trail commission?
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