According to section 11AA (2) of SEBI act, any scheme or arrangement made or offered by any company under which the contributions, or payments made by inventors, are pooled underutilised with a view to receive profits, income, produce or property & is managed on behalf of the investors is a Collective Investment Scheme.
Investors do not have any day to day control over the management and operation of such scheme or arrangement.
Through the SEBI ordinance 2014, any pooling of funds under any scheme or arrangement, which is not registered with SEBI, involving a corpus amount of one hundred crore rupees or greater shall be estimated to be a collective investment scheme.
Which are the schemes not treated as CIS?
The following does not establish a collective investment scheme:
i.Scheme or arrangement made or offered by a co-operative society or a society registered under society act;
ii.Scheme or organization under which deposits are recognized by non-banking financial companies
iii.Scheme or organization start a contract of insurance to which the Insurance Act, applies;
iv.Scheme or organization offering for any Scheme, Pension Scheme or the Insurance Scheme framed under the Employees Provident Fund and Miscellaneous Provisions Act, 1952
v.Scheme or organization under which deposits are accepted under section 73 to 76 of the Companies Act, 2013;
vi.Scheme or preparation falling within the meaning of Chit business as defined in clause (d) of section 2of the Chit Fund Act, 1982;
vii.Scheme or organization under which contributions made are in the nature of subscription to a mutual fund;
Collective investment Management Company:
IT is a company incorporated under the provisions of the Companies Act, 2013 and registered with SEBI under the SEBI (Collective Investment Schemes) Regulations, 1999, whose object is to organize, operate and manage a Collective Investment Scheme.
Any individual other than a Collective Investment Management Company which obtained a certificate under these regulations shall carry on or sponsor or launch a collective investment scheme.
Any individual proposing to carry any activity as a Collective Investment Management Company on or after the commencement of these regulations shall make an application to the Board for the grant of registration in Form A.