Company names which MFDs should avoid

By Morningstar |  21-10-20 | 

Following the new Registered Investment Adviser norms released by the Securities and Exchange Board of India, or SEBI, there was a lot of confusion on the nomenclature to be used by mutual fund distributors, or MFDs. Association of Mutual Funds in India, or AMFI, has come out with a list of names which are permissible and not permissible to be used by MFDs.

MFDs should refrain from using nomenclature like adviser, consultancy, financial planning, IFA, money manager, investment planner, vision, fin plan, finsol, mall, wealth creator, and any such combination.

SEBI has clarified that every MFD, while dealing in the distribution of securities, should clearly specify that he/she is acting as an MFD.

MFDs need to mandatorily have a tagline which states “AMFI-registered mutual fund distributor” along with/below their name, in a clear and legible font of at least font size 12, in all forms of printed communication so as to ensure compliance with the above requirement.

MFD’s name and tagline should be placed together in a clear and legible font size. The same disclosure should be followed in all forms of communication i.e. website, mobile app, printed or electronic materials, business card, sign board etc.

The timeline for making an application to the Registrar of Companies for a change in name has been extended from October 15, 2020, to October 31, 2020. The same timelines will apply for MFDs established as proprietary/partnership firms.

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