Unit Holder Protection Committee

An asset management company has a lot on its mind. Selling schemes. Managing money. Holding down costs. Earning a profit for its owner.

The Unit Holder Protection Committee exists so that one body inside the AMC thinks about only one thing: the people who bought the units.

SEBI requires every AMC to set one up. The committee looks at how schemes are sold and advertised, how conflicts of interest are handled, how complaints are settled, and how well investors are informed.

It does not fix these things itself. It reviews them, reports to the AMC's own board, says what should be done, and then checks that it was done.

The requirement. Under the SEBI Mutual Fund Regulations, 2026, the AMC is required to constitute a Unit Holder Protection Committee. It is a committee of the AMC, which is what makes it different from the trustees — a separate legal tier altogether.

The three responsibilities, as the workbook lists them.

The mandate, in two limbs. The UHPC must (i) review the various compliance issues relating to the protection of the interests of unit holders, and (ii) keep unit holders well informed about and educated on mutual fund products, the investor charter, and complaint handling procedures.

Where its work goes. The UHPC submits its report to the board of directors of the AMC, along with recommendations for action, and then monitors the implementation of those recommendations. So the loop closes inside the AMC, not at the trustees and not at SEBI.

On figures: the workbook's passage gives the UHPC no size, no quorum, no independence proportion and no reporting deadline. The only number in it is the year of the governing regulations, 2026, and nothing further is asserted here. Where other governance bodies in the same chapter come with numbers attached, the workbook supplies them; for the UHPC it does not, and a figure borrowed from a neighbouring paragraph would not be the UHPC's.

Nilgiri Asset Management Ltd holds its quarterly UHPC meeting. The agenda and figures are illustrative; the committee's remit is the workbook's.

Item 1 — grievances. 412 complaints were received in the quarter against 286 in the previous one. Sixty-one per cent of the rise concerns one thing: investors in a new hybrid scheme who say they were sold it as a substitute for a bank fixed deposit. That is a sales and marketing practice question, squarely inside responsibility 2.

Item 2 — advertising. A campaign quotes the scheme's 26 per cent one-year return in large type and the standard warning in small. Responsibility 2 covers advertisement, so the committee reviews it.

Item 3 — conflict of interest. The scheme bought Rs 18 crore of paper issued by a company in the sponsor's group. The committee notes it and asks how the fairness justification was recorded.

Item 4 — investor awareness. Only 9 per cent of unit holders opened the investor charter link mailed to them. The mandate's second limb is exactly this, so the committee asks for the charter and the complaint handling procedure to be carried in the next account statement instead of a link.

What happens next. The committee does not withdraw the advertisement or refund the 412 complainants. It sends its report to the board of directors of Nilgiri AMC with recommendations — retrain the sales staff who sold the hybrid scheme, redo the campaign, print the charter in the statement — and at the next quarter's meeting it checks what was actually implemented.

Chapter 3 (Legal Structure of Mutual Funds), which carries 8 per cent of the marks, introduces the UHPC immediately after the custodian, among the parties and governance bodies of a fund. The examinable facts are short and specific: the AMC constitutes it, its report goes to the AMC's board of directors with recommendations, it monitors implementation, and its remit expressly covers all products and services of the AMC. A question may also test the second limb of the mandate — investor education about products, the investor charter and complaint handling.

• The AMC constitutes the UHPC, and it reports to the AMC's board of directors. Not to the trustees, not to SEBI, not to AMFI.
• It reviews and recommends; it does not redress. Grievance redressal is the AMC's operation. The UHPC reviews how well it is done and monitors what was promised.
• Do not confuse it with the trustees. The trustees are a separate tier holding the scheme's property in trust; the UHPC is a committee inside the AMC.
• Its remit is all products and services of the AMC, not one scheme and not only mutual fund schemes it happens to be asked about.
• The workbook's authority for it is the SEBI Mutual Fund Regulations, 2026, cited in Chapter 3.
• Investor awareness and education sit inside the mandate, alongside compliance review — an option that limits the UHPC to compliance alone is incomplete.