AMFI announces changes on ARN renewal; new rules effective from January 2012
Mumbai: AMFI has clarified that no commission will be paid on business procured during the non validity of ARN period (after six months of expiry of ARN) from January 2012 through its circular issued on October 14, 2011. It has also said that commissions will be suspended if distributors do not furnish declaration certificate within three months of the end of a financial year (June 30).
R&Ts will be required to print reminders regarding ARN renewal on the front page of brokerage sheets or send letters in this regard to distributors from the end of a financial year. If IFAs renew their ARN till December 31, 2011, the commission which has been suspended will be released.
If ARN not renewed:
1. Upfront/trail commission accrued till the date of expiry of ARN will be released in the next payment cycle.
2. Any business done after the expiry of ARN and before renewal of ARN will be treated as invalid business and no upfront/trail is payable on such business.
3. Any business done after the expiry of ARN and before renewal of ARN will be treated as invalid business and no upfront/trail is payable on such business.
4. If the ARN is renewed within six months from the date of expiry of ARN, then the suspended upfront/trail commission will be released.
If the ARN is renewed after six months from the date of expiry of ARN, then suspended upfront/trail commission, as mentioned at point no. 2 above, will not be paid and the same will be forfeited/ written off. Upfront and trail commission on business done after the renewal of the ARN can be released.
|
Circumstances |
Action to be taken by AMCs |
|
ARN expired on 30th June 2011 (Commission payable as on 30th June 2011) |
SIP, Upfront & Trail Commission may be paid in the next payment cycle. |
|
ARN not valid due to non renewal i.e. from July 1, 2011 |
All types of commission accrued from July 1, 2011 to be suspended. Any business done during the period ARN was not valid due to non renewal, will not be entitled to receive any commission. As such, no commission should be accrued in respect of the same. |
|
ARN Renewed within 6 months of expiry date (i.e. by 31st Dec 2011) |
Suspended Commission will be released. To clarify, this will not include any commission for the business done during the period when the ARN was invalid due to non renewal i.e. business done during the period July 1, 2011 till the date of renewal of ARN, in the instant case |
|
ARN Renewed after 6 months of expiry date (post 31st December 2011) |
All commission including trail, in respect of business procured prior to expiry of ARN i.e. 30th June, 2011 and suspended due to non renewal, is forfeited/ written off (Please refer the above note). Upfront and Trail Commission payable only on the business canvassed subsequent to renewal of ARN. |
What do you need to do?
Always make sure to renew your license on or before six months of the expiry of ARN license so as to avoid delay or suspension of any commission.
How do you need renew ARN?
Individuals and corporate employees have to clear NISM - CPE (Continuing Professional Education) program
Validity period of ARN
The ARN is valid for a period of three years.
ARN Renewal Fees
|
Category |
Fees (Rs.) |
|
Individual and corporate employee |
2500 |
|
Banks/ NBFC/ Institutional Distributors |
250,000 |
|
Public Ltd. Co. |
250,000 |
|
Pvt. Ltd. Co. |
25,000 |
|
Limited Liability Partnership (LLP) |
25,000 |
|
Partnership Firm |
12,500 |
|
Societies and Trust / HUF |
12,500 |
|
Post Offices |
7,500 |
|
Proprietorship Firm |
5,000 |
Read the AMFI circular:
