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

Kisan Sahkari Samiti, registered under a State cooperative societies law, offers an arrangement in which members pool money to be managed by the society for returns. Under Section 11AA of the SEBI Act, how is this arrangement treated?

The arrangement is not a collective investment scheme. Section 11AA(3) excludes schemes made or offered by a cooperative society registered under the Co-operative Societies Act, 1912 or a State cooperative societies law, even if the pooling, profit and management conditions are otherwise satisfied.

  1. AIt is a collective investment scheme because it meets all four conditions
  2. BIt is a collective investment scheme only if the corpus is below one hundred crore rupees
  3. CIt is not a collective investment scheme because schemes made or offered by registered cooperative societies are excludedCorrect
  4. DIt is a collective investment scheme unless SEBI grants a specific exemption

Explanation

Section 11AA(3)(i) says that, notwithstanding the conditions in sub-section (2), a scheme made or offered by a cooperative society registered under the Co-operative Societies Act, 1912 or a State cooperative law is not a collective investment scheme. Option A ignores this carve-out, even though the four conditions may be met.

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