In response to AMFI’s query on nomenclatures that can be used and cannot be used, SEBI has clarified that MFD’s name should reflect that they are acting as a distributor of a financial product.
SEBI said that MFDs entity name should not reflect or create an impression that they perform a role of IFA/adviser/wealth manager. Simply put, you will have clearly mention that you are acting as a MFD and dealing with distribution of mutual funds. SEBI said, “The name of an MFD should reflect the registration held by the entity and should not in any way create an impression of performing a role for which the entity is not registered. Thus, every MFD, while dealing in distribution of securities, should clearly specify that he /she is acting as MFD.”
MFD’s name and tagline should be placed together in a clear and legible font size; this has to be followed in all forms of communication i.e. website, mobile app, business card and so on, said SEBI.
Other key clarification from SEBI:
- MFDs using nomenclature like advisor, IFA and wealth managers in their company name will have to submit their application for name change to the registrar of the company (ROC) and furnish documentary evidence before CAMS by October 31, 2020
- SEBI registered stock brokers and portfolio managers offering advisory services will have to recommend and offer direct plans. These stock brokers and portfolio managers can use nomenclature like adviser in their name
- However, stock brokers and portfolio managers engaged in distribution of regular plans cannot use words like advisers. Also, stock brokers and portfolio managers facilitating both – advisory and execution cannot use nomenclature like adviser
- MFDs having LLP and private limited companies will have to obtain no objection certificate (NOC) for the new company name. SEBI has asked AMFI to issue such NOCs for the specific purpose of name change by MFDs in compliance with the SEBI IA Regulations, 2013
- MFDs applying for name change can send an email to contact@amfiindia.com mentioning ‘Request for NOC for Name Change for submission to ROC’ in the subject line and send their ARN, existing name, proposed name, designation and mobile number of authorized person from their registered email id
