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A Mutual Fund Distributor (MFD) is an individual or a business entity that is engaged in the business of selling and distributing mutual funds to investors. While a person acting as a mutual fund distributor is known as an individual MFD, a company, LLP or partnership firm acting as a distributor is known as a corporate MFD.
If you’re confused about whether you should operate individually or start a corporate entity, this blog post is worth reading. Here, we shall compare both models in detail so you can easily decide which one suits your business goals best.
An individual mutual fund distributor is a person who is registered with and authorized by the Association of Mutual Funds in India (AMFI) to sell, market and distribute mutual fund products. They possess an AMFI registration number (ARN), which basically functions as an MFD license.
They generally tend to operate independently. Doing so allows them to build direct relationships with clients and offer personalized investment guidance to them.
A corporate mutual fund distributor is a business entity (such as one person company, limited liability partnership, private limited company, public limited company, etc.) that is registered with and authorized by AMFI to sell, market and distribute mutual fund products.
Like individual MFDs, the corporate MFDs also possess an AMFI registration number (ARN). They must ensure their employees hold a valid Employee Unique Identification Number (EUIN) in order to sell or advise regarding mutual funds. Since the corporate MFDs operate through an organized business structure, they can serve a larger client base.
Confused by the registration process? Whether you choose Individual or Corporate, we handle the paperwork for you.
By going through the table provided below, you will be able to understand the differences between individual vs corporate MFDs in India:
|
Aspect |
Individual MFD |
Corporate MFD |
|
Definition |
An Individual MFD is an AMFI-registered person who is engaged in the business of selling and distributing mutual funds to investors. |
A Corporate MFD is an AMFI-registered MFD business entity that sells and distributes mutual funds to investors. |
|
Setup Requirements |
Individual MFDs have lower setup requirements. They have no separate legal entity to manage for MFD business. |
Corporate MFDs have to face more extensive setup requirements than Individual MFDs. The former MFDs must establish a registered business entity, comply with additional regulatory obligations, maintain formal governance structures and have proper reporting systems in place. |
|
Cost |
Individual MFDs incur lower costs than Corporate Mutual Fund Distributors. |
Corporate MFDs incur higher costs compared to Individual MFDS. |
|
Liability |
Unlimited Liability to the individual MFD. |
Limited Liability in case of pvt ltd, LLP, OPC and public ltd, etc. However, in case of partnership firm, there is unlimited liability. |
|
AMFI Registration Fees |
The AMFI registration fee for individual mutual fund distributors is Rs. 3000. |
Rs. 40,000 for Pvt Ltd/LLP and Rs. 20,000 for Partnership Firm, according to AMFI. |
|
AMFI Registration Renewal Fees |
The AMFI registration renewal fee for individual MFDs is Rs. 1,500. |
Rs. 20,000 for Pvt Ltd/LLP and Rs. 10,000 for Partnership Firm. |
After going through the table, we hope all your doubts are clear regarding the differences between individual and corporate mutual fund distributors in India.
The difference between an individual MFD and a corporate MFD lies in the fact that an individual MFD operates as a single person with minimal setup requirements and lower costs but bears unlimited liability whereas a corporate MFD operates through a structured business entity with higher compliance and costs but ‘usually’ enjoys the benefit of limited liability. Ultimately, the choice between the two depends on what your long term business vision is, the level of risk you are willing to take and your growth plans.
Want to become an AMFI-registered Mutual Fund Distributor in India? Get in touch with Registrationwala. We will help you in obtaining the Mutual Fund Distributor License from AMFI in a smooth and hassle free manner.
Q1. Which authority regulates the operations of individual and corporate MFDs in India?
A. The operations of individual and corporate MFDs in India are regulated by two authorities namely Securities and Exchange Board of India and Association of Mutual Funds in India.
Q2. What is the ARN fees for individual MFDs?
A. The ARN registration fee for individual MFDs is Rs. 3000.
Q3. What is ARN registration fee for MFDs registered as private limited companies?
A. The ARN registration fee for MFDs registered as pvt ltd co is Rs. 40,000. Kindly note that the fee structure laid down for ARN by AMFI is subject to revision from time to time. So, for accessing the latest fee details, we advise you to connect with MFD consultants or check the fee structure available on the official AMFI website.
Q4. Do employees working for corporate MFDs need to obtain ARN?
A. The employees working for corporate MFDs do not need to obtain ARN. Instead of obtaining AMFI, they must obtain Employee Unique Identification Number (EUIN) from AMFI.
Q5. What is the ARN registration fee for MFDs registered as public limited companies?
A. The ARN registration fee for MFDs registered as public limited companies is Rs. 4,00,000. This fee is subject to revision from time to time.
Q6. What is the ARN registration fee for MFDs registered as OPCs?
A. The ARN registration fee for MFDs registered as OPCs is 40,000. This fee is subject to revision by AMFI, from time to time.
Q7. What is the ARN registration fee for MFDs registered as LLPs?
A. The ARN registration fee for MFDs registered as LLPs is Rs. 40,000. Kindly note that this fee is subject to revision from time to time.
Q8. What is the ARN registration fee for MFDs registered as NBFCs?
A. The ARN registration fee for MFDs registered as NBFCs is Rs. 1,00,000. Please note that this fee is subject to revision from time to time. For latest details, visit the official website of AMFI or get in touch with an MFD license consultant.
Hi, I'm Sachin Chawla. I’m a commerce graduate from Agra University and a Chartered Accountant (2015) with DISA certification. I focus on helping businesses with formation, management, tax and FEMA matters, business licenses and regulatory compliance, IP advisory, risk management and auditing among others. Through my articles, I aim to share my expertise and provide practical guidance in these areas.
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