What a Distributor Must Disclose: Status and Commission
An investor in a regular plan is entitled to know who they are dealing with and what that person is paid. This lesson covers the description a distributor must use, where commission is shown in rupees, and the rules on disclosing and rebating commission.
Saying what one is
A distributor must describe itself as an AMFI-registered Mutual Fund Distributor, with its name and ARN, on its communications. The description tells the investor two things at once: that the person is registered, and that the registration is for distribution.
The other half of the rule is what a distributor may not call itself. It may not use the title adviser, wealth adviser, financial planner or anything similar unless it is registered with SEBI as an investment adviser. A title of that kind would suggest a service, and a way of being paid, that an ARN does not cover.
Commission shown in rupees
Commission is charged within the scheme's expenses, so an investor never sees it as a separate deduction. The half-yearly consolidated account statement makes it visible: it shows the commission paid to the distributor on the investor's holdings, in rupees, together with the scheme's average total expense ratio.
Scheme documents and portfolio disclosures describe the scheme. They do not show what was paid on one investor's account; the account statement does.
Disclosing all commissions, and no rebates
AMFI's code of conduct requires a distributor to disclose all the commissions it receives, including those on the competing schemes it could have offered. The investor can then see whether one scheme pays the distributor more than another. The duty does not depend on a written request or on the size of the commission.
A distributor may not rebate commission, that is, pass any part of it back to the investor. Breaches of the code can lead to suspension or cancellation of the ARN.
Disclosure tells the investor the cost of distribution. It says nothing about how a scheme will perform.
Rules at a glance
Reading the half-yearly statement (illustrative)
Farhan holds units in the regular plans of two schemes, bought through the same distributor. His consolidated account statement for the half-year lists each holding and shows, in rupees, the commission paid to the distributor on it, along with each scheme's average total expense ratio.
The figure is what the fund house paid the distributor out of the scheme's expenses during that half-year. Farhan paid nothing separately, and no part of the commission may be passed back to him. The statement tells him the cost; it does not say how either scheme will perform.
Key points
- Required description: AMFI-registered Mutual Fund Distributor, with name and ARN, on communications.
- A distributor may not call itself an adviser, wealth adviser or financial planner unless registered with SEBI as an investment adviser.
- The half-yearly consolidated account statement shows the commission paid to the distributor in rupees, with the scheme's average total expense ratio.
- A distributor must disclose all commissions, including those on competing schemes.
- A distributor may not rebate commission to investors.
Common misunderstandings
- A distributor is not free to choose its own title: it must use the description AMFI-registered Mutual Fund Distributor, with name and ARN.
- Commission is not disclosed only as a percentage: the half-yearly consolidated account statement shows it in rupees.
- A share of commission handed back to the investor is not a permitted discount: rebating is barred by AMFI's code.
Questions people ask
Where does an investor see the commission paid on their own holdings?
In the half-yearly consolidated account statement, in rupees, with the scheme's average total expense ratio.
Must a distributor disclose commission only on the scheme it sells?
No. AMFI's code requires disclosure of all commissions, including those on competing schemes.
What can happen if a distributor breaks the code?
The ARN can be suspended or cancelled.
What this lesson relies on
- AMFI code of conduct for mutual fund distributors
- SEBI Master Circular for Mutual Funds, 20 March 2026 (consolidated account statement)
- SEBI (Investment Advisers) Regulations, 2013
This lesson was reviewed independently against these sources on 8 October 2026. Rules change: check the current regulation, scheme document or policy wording before relying on any figure. This is education, not advice.