One of our readers wrote to us with this query.
I have been doing MF distribution as a sub broker for the last 5 years. However, I have started doing the incremental business under my own ARN since last six months.
I would like to understand if I can transfer my assets from national distributor to my own ARN. Also, is it necessary to obtain NOC?
Nitin V Palyekar via email
Yes, you can now transfer your assets built with a national distributor to your own ARN. Recently, AMFI has allowed distributors working under sub broking model with national distributors to transfer their assets to own ARN.
Earlier, transfer of AUM from national distributor to sub distributor was not allowed as partial transaction of assets is not allowed in mutual funds. However, AMFI has revised the existing AUM transfer norms for distributors and allowed sub distributors to move assets from national distributors.
Remember that such a transfer is allowed only if sub distributor transfers his entire assets from national distributors to own ARN.Also, you will be required to obtain an NOC from the national distributorand clients and inform respective AMCs about this transfer.
Keep in mind these things in mind before moving out your assets from national distributor ARN:
- List of your clients with mobile numbers and email IDs
- List of folios, client-wise and AMC-wise
- Letter for clients’ consent
You will have to inform clients in writing via letter or email informing them about the change in ARN and the rationale behind it. In addition, you will have to highlight that if the clients have any objection for the change in distributor code, they must write to the respective AMCs directly. AMCs will have to effect changes to ARN within 15 days if they don't receive any objection from clients.
In case a client raises objection, you should immediately inform the AMC.
Also, you will have to submit transfer application to AMCs. The transfer application must have reason for transfer supported by evidence and certification that letters/emails have been sent to all existing clients intimating them of change of distributor. You will have to attach a sample of such communication along with a list of clients.
The new distributor would get trail commission only after transfer of valid assets (KYC compliant accounts). Also, the new distributor will get trail commission on a prospective basis on the valid assets i.e. trail commission rate would be lower of commission on old ARN and new ARN.
