Your rights as an investor
What a unit-holder is entitled to
Investors are not at the mercy of the fund, they hold real, enforceable rights, and the exam tests them as a set. Start with the foundation: the right to beneficial ownership. A unit-holder has a proportionate right to the scheme’s assets (which are held in trust for them), can ask for a unit certificate, and can hold units in demat, where they are freely transferable. On top of that sit the everyday rights, to information (the scheme documents, account statements and portfolio) and to timely service (redemption money and payouts within the timeline SEBI sets).
The rights that surprise people are the powerful ones. An investor can change their distributor at will, by a simple written request, with no No-Objection Certificate from the old agent, and in that case commission is paid to neither distributor, a rule designed squarely to protect the investor, not the intermediary. Collectively, unit-holders are even more powerful: 75% of them can terminate the appointment of the AMC, and 75% can pass a resolution to wind up a scheme. They also keep the right to exit at NAV without a load, for at least 30 days, whenever a fundamental attribute changes.
Even forgotten money is protected: under the right to unclaimed amounts, an investor who claims within 3 years gets the prevailing NAV (including the income earned on it), while after 3 years they get the NAV as at the end of 3 years. Finally, rights come paired with obligations, chiefly a valid PAN and KYC. Learn these as things an investor is owed, and the whole cluster becomes intuitive, and reliably scoring.
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Right to beneficial ownership, a unit-holder has a proportionate right to the scheme's assets, can ask for a unit certificate, and can hold units in demat; demat units are freely transferable.
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Right to information, the scheme documents, account statements and the portfolio must be available.
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Right to timely service, redemption money and payouts within the timeline SEBI sets.
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Right to change the distributor, by a written request, with no No-Objection Certificate needed, and in that case commission is paid to neither the old nor the new distributor.
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Right to remove the manager, 75% of unit-holders can terminate the appointment of the AMC, and 75% can pass a resolution to wind up a scheme.
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Right to exit on a fundamental change, notice plus a load-free exit window of at least 30 days.
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Right to unclaimed amounts, claimed within 3 years the investor gets the prevailing NAV (with income earned); after 3 years, the NAV at the end of 3 years.
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Along with rights come obligations, chiefly a valid PAN and KYC.
An investor unhappy with their agent simply writes in to change the distributor, no reason and no NOC required. Neither the old nor the new distributor earns commission on that folio from then on, which is exactly why the rule exists, to protect the investor, not the agent.
Practice
🔥 0 streakReal exam format. Answer by voice, tap, or press 1 to 4. No negative marking, so always attempt.
What proportion of unit-holders can terminate the appointment of an AMC?
To change their distributor, an investor must:
If an investor claims an unclaimed amount within 3 years, they receive:
Which of these is a genuine right of a unit-holder?
Along with rights, an investor's core obligation is to:
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Education for the exam, not financial advice. Answers can be wrong, so confirm figures against the workbook.