One of readers wrote to us with this query:
We run a mutual fund distribution business under HUF ARN. To expand our business, we would like to appoint other ARN holders as sub-distributors. I would like to understand as an HUF ARN holder, can I appoint sub-distributors. If yes, what is the process?
Chandrakant Palan, Kachcha, Gujarat
Dear Chandrakant,
Yes, you can appoint other ARN holders as sub-distributors. There is no norm which stops MFDs be it an individual, HUF or corporate to appoint other ARN holders as sub brokers. In fact, handful of distributors have started following this model to expand their business.
In this arrangement, you will have to become principal broker by quoting your ARN on all transactions procured by your partners. Remember that you will be held responsible for business activities and compliance of your sub brokers.
Ensure that you have put a robust mechanism in place to monitor assets procured by your sub distributors. It is better to work with software solution providers actively working in the MF distribution business.
On commission, it will be credited to your account. You can pass on the commission to your sub-brokers based on your commercial understanding with your sub distributors.
