Non-individuals trip up in paper chase for MIN

The process of getting a mutual fund identification number (MIN) is turning out to be a cumbersome task for non-individual investors as well. Many of them, along with their financial advisors, have been left scratching their heads at the route to be taken in fulfilling the required conditions. The problem relates to getting the documents that have been specified in the application form and made mandatory.

Definition of non-individuals

The process of MIN applications has divided the various investor categories into two categories — individuals (including NRIs) and non-individuals which include Hindu undivided family (HUF), a partnership firm, companies or body corporate, trusts, foundations, NGOs, charitable organisations, unincorporated associations or a body of individuals and even FIIs and MFs.

The first category consists of individuals. This also includes NRIs investing from abroad. The second category consists of all other entities other than individuals. There is a distinction within this category too.

Some entities like the HUF and a partnership firm for example are nothing more than a handful of individuals, which from a legal view point have been classified as non-individuals.

Compulsory requirement of documents

In case of an individual, the main documents pertain to proof of identity and address proof. Within these areas there are list of specified documents that can be given. In case of non-individual entities too, a list of documents have been specified for each category of investors.

There is, however, a small change here that has a major impact on the entire scheme of things. All documents, specified and mentioned for a particular type of investor in the form, are mandatory. This means that all these documents or their photocopy, along with the original or the attested copies, have to be produced by the investor.

Issues to tackle

This is where several financial planners and their customers have run into trouble. Here are few examples to explain why. For an HUF, the requirements are a deed of declaration and the latest bank account statement or passbook.

This requirement of a deed of declaration has left several people stumped. Many of them have not even heard of such a document let alone be in possession of one. A financial planner explains that a HUF is formed by the operation of Hindu law where a male member along with his spouse and children will constitute the HUF. There is no deed of declaration present for such HUFs.

However, later this confusion was cleared as a deed of declaration refers to a declaration that the HUF has to make on a Rs 100 stamp paper regarding their investment in the mutual fund, which has to be signed by the ‘karta’ and other adult members with their signature verified by the bank manager.

Even a trust requires a certificate of registration; trust deed and authorised signatory list with specimen signatures, along with the application form. All these are fine for a registered trust but according to financial planners the question arises for a private trust that has a trust deed but is not registered. Due to this, these trusts may not be able to invest in MFs.

All these are basic issues that many of the players will face. However, there is one more technical issue that many of them could face. A requirement for the documents states that if the documents including attestation or certificates are in a regional language then they will have to be translated into English for submission.

Imagine the problem that may arise because several trusts will have their trust deeds in regional languages. All of them will have to take the time and efforts to get this translated and submit this with the application form.