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

Meera Agro Ventures invites the public to contribute money towards a plantation project. Contributions are pooled, investors expect to receive produce or income from the project, the property is managed on their behalf, and investors have no day-to-day control. Under Section 11AA of the SEBI Act, 1992, how is this arrangement classified?

The arrangement is a collective investment scheme because it meets all four conditions in Section 11AA(2): pooled contributions, a view to receive profits or produce, management on behalf of investors, and no day-to-day investor control. The scheme may be offered by any person, and the property need not be identifiable.

  1. AA collective investment scheme, because all the specified conditions are satisfiedCorrect
  2. BNot a collective investment scheme, because only a registered company can run one
  3. CNot a collective investment scheme, because the property is not identifiable
  4. DA collective investment scheme only if the corpus is above one hundred crore rupees

Explanation

Section 11AA(2) lists four conditions: pooling of contributions, a view to receive profits, income, produce or property, management on behalf of investors, and no day-to-day control by investors. All four are met here. The property need not be identifiable, and the scheme may be offered by any person, so the other options are wrong.

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