The sponsor

The sponsor is the party that starts the whole thing, so SEBI vets it the hardest, and the exam rewards knowing the exact tests. Above all, the sponsor must have a sound track record and a reputation for fairness and integrity. That reputation is then backed by hard numbers on its finances.

Three financial tests do most of the work. First, the sponsor must have a positive net worth, share capital plus reserves minus accumulated losses, in all of the immediately preceding 5 years. Second, it must have an average net annual profit (after depreciation, interest and tax) of at least ₹10 crore over those five years. Third, its positive liquid net worth must be more than the capital it proposes to contribute to the AMC, so it can genuinely stand behind the venture rather than promise from an empty pocket. SEBI also allows a well-capitalised sponsor route for applicants that cannot show the profit track record but bring the financial strength instead.

One modern wrinkle is worth knowing: the self-sponsored AMC, a route that lets a qualifying, established AMC operate without a traditional sponsor, subject to SEBI’s conditions. Keep the three tests, five years of positive net worth, ₹10 crore average profit, and liquid net worth above the contribution, firmly in mind, and the sponsor questions become straightforward marks.

Sponsor eligibility follows the current SEBI Mutual Fund Regulations; confirm the edition in force before your exam. Education for the NISM Series V-A exam, not financial advice.