Collective Investment Schemes

Collective Investment Schemes: According to SEBI “Any scheme or arrangement made or offered by any company under which the contributions, or payments made by the investors, are pooled and utilized with a view to receive profits, income, produce or property, and is managed on behalf of the investors is a Collective Investment Schemes (CIS)

Collective Investment Management Company:

A Collective Investment Management Company is a company that is registered with SEBI under the SEBI (Collective Investment Schemes) Regulations, 1999, whose object is to organize, operate and manage a Collective Investment Scheme

However, following arrangements do not constitute a collective investment scheme:

1. By co-operative societies:

Any scheme or arrangement made or offered by a co-operative society or a society being a society registered or deemed to be registered under any law relating to co-operative societies for the time being in force in any State

2. By non-banking financial companies:

Any scheme or arrangement under which deposits are accepted by non-banking financial companies

3. Insurance:

Any scheme or arrangement which being a contract of insurance to which the Insurance act is applicable.

4. Under EPF act:

Any scheme or arrangement providing for any Scheme, Pension Scheme or the Insurance Scheme framed under the Employees Provident Fund and Miscellaneous Provisions Act, 1952

5. Deposits under Companies act:

Any scheme or arrangement under which deposits are accepted under the provisions of companies act

  1. Any scheme or arrangement under which deposits are accepted by a company declared as a Nidhi or a mutual benefit society under sections of the companies act
  2. Chit fund act:

Any scheme or arrangement falling within the meaning of Chit business as defined in clause (d) of section 2of the Chit Fund Act, 1982

8. Mutual fund:

Any scheme or arrangement under which contributions made are in the nature of subscription to a mutual fund

Collective Investment Schemes (CIS) Process:

  1. A company should 1st get itself registered with SEBI as a Collective Investment Management Company. After successful registration, a certificate will be issued.
  2. Then the company can come up to the public with the schemes they would like to make the investment on
  3. The company should ensure that the schemes launched are credit rated as well as appraised by an appraising agency.
  4. An offer document shall be made by the company and copy has to be filed with SEBI for which SEBI will respond within 21 days suggesting any modifications it wants to.
  5. If SEBI has suggested no modification within 21 days from the date of filing, Collective Investment Management Company can issue the offer document to the public for raising funds from them.
  6. After collection of funds, within two months from the closure of the financial year the company has to provide the investors with a copy of the summary of the yearly appraisal report, Profit & Loss account and balance sheet.
  7. Also the company should ensure that within two months from the date of finalization of accounts scheme wise annual report or an abridged form thereof has published in a national daily
  8. Within one month from the close of each quarter, scheme wise un-audited quarterly financial results have to be published in a national daily.

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