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

Gokul Cooperative Society, registered under a State cooperative societies law, runs a pooled scheme in which members contribute funds managed by the society for returns. Under Section 11AA of the SEBI Act, how is this scheme treated?

It is not a collective investment scheme. Section 11AA(3)(i) excludes schemes made or offered by cooperative societies registered under the 1912 Act or any State cooperative law, even if they meet the pooling and management conditions of sub-section (2).

  1. AIt is a collective investment scheme requiring SEBI registration
  2. BIt is a collective investment scheme only if the corpus is below Rs 100 crore
  3. CIt is not a collective investment scheme because schemes of such cooperative societies are excludedCorrect
  4. DIt is a collective investment scheme only if its units are listed

Explanation

Section 11AA(3)(i) says a scheme made or offered by a cooperative society registered under the Co-operative Societies Act, 1912 or under any State law on cooperative societies is not a collective investment scheme, despite meeting sub-section (2). Corpus size and listing do not alter this exclusion.

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