SEBl (COLLECTIVE INVESTMENT SCHEMES) REGULATIONS - tradecareer

 SEBl (COLLECTIVE INVESTMENT SCHEMES) REGULATIONS

Definition 

Collective Investment Management Company mean a company incorporated under the 

Companies Act, 2013 and registered with SEBI under these regulations, whose object is 

to organize, operate and manage a collective investment.

Certificate of Registration to carry on CIS business

No person other than a Collective Investment Management Company which has 

obtained a certificate under the regulations should carry on or sponsor or launch a 

collective investment scheme.

Collective Investment Scheme Property

“Collective investment scheme property" includes:

* subscription of money or money's worth (including bank deposits) to the collective 

investment scheme;

* property acquired, directly or indirectly, with, or with the proceeds of, subscription 

of money; or

* income arising, directly or indirectly from, subscription money or property above.

Restriction on Business Activities

                                                             

Collective Investment Management Company should not:

i. undertake any activity other than that of managing the scheme;

ii. act as a trustee of any scheme;

iii. launch any scheme for the purpose of investing in securities;

iv. invest in any schemes floated by it.

However, it has been provided that a CIMC may invest in its own scheme, if it makes a 

disclosure of its intention to invest in the offer document of the scheme, and does not 

charge any fees on its investment in that scheme.

Obligations of Collective Investment Management Company

Every Collective Investment Management Company should:

i. be responsible for managing funds or properties of scheme on behalf of the unit 

holders;

ii. exercise due diligence and care in managing assets and funds of the scheme;

iii. also be responsible for the acts of commissions and omissions by its employees 

or the persons whose services have been availed by it;

iv. appoint registrar arid share transfer agents and should also abide by their 

respective Code of Conducts as specified by SEBI;

v. give monthly receipts for all monies received and report of receipts & payments 

to SEBI;

vi. hold a meeting of Board of Directors to consider the affairs of scheme, at least 

twice in every 3 months and also ensure that its officers or employees do not 

make improper use of their position or information to gain an advantage for 

themselves or for any other person or to cause detriment to the scheme;

vii. obtain adequate insurance against the properties of the schemes and comply 

with such guidelines, directives, circulars and instructions as may be issued by 

SEBI.

                                                                    

Penal Provisions

If, a registered collective investment management company violates certain provisions 

of the regulations, then following will be the consequences:—

* Suspension/cancellation of certificate.

* SEBI may initiate criminal prosecution in the interests of the securities market and 

the investors passing of following directions such as:

1. requiring the person concerned not to collect any money from investor or to 

launch any scheme;

2. prohibiting the person concerned from disposing of any of the properties of the 

scheme acquired in violation of the Regulations;

requiring the person concerned to dispose off the assets of the scheme in a 

manner as may be specified in the directions;

3. requiring the person concerned to refund any money or the assets to the 

concerned investors along with the requisite interest or otherwise, collected 

under the scheme;

4. prohibiting the person concerned from operating in the capital market or from 

accessing the capital market for a specified period.

ROLE OF COMPANY SECRETARY

The Company Secretary shall ensure that the money mobilization carried out by the 

company will not trigger the parameters of CIS Regulations.