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CS Executive · Capital Market and Securities Laws · Collective Investment Schemes

A State-registered cooperative society offers an arrangement that pools members' money and meets every condition in Section 11AA(2). What is the position under Section 11AA(3)?

It is not a collective investment scheme. Section 11AA(3) excludes, despite sub-section (2), schemes offered by cooperative societies registered under the 1912 Act or State cooperative laws, so satisfying the four conditions does not bring it within the definition.

  1. AIt is a collective investment scheme but needs only a lower penalty
  2. BIt is a collective investment scheme if the corpus exceeds Rs 100 crore
  3. CIt is not a collective investment scheme because schemes by registered cooperative societies are excludedCorrect
  4. DIt is a collective investment scheme only if it is listed

Explanation

Section 11AA(3) operates notwithstanding sub-section (2) and excludes schemes made or offered by cooperative societies registered under the 1912 Act or under State cooperative laws. Meeting the sub-section (2) conditions therefore does not make it a collective investment scheme. The corpus-based proviso applies only to arrangements not covered under sub-section (3).

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