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CS Executive · Capital Market and Securities Laws · Mutual Funds

Meera pools money from many investors in a scheme managed by professionals, and the investors have no day-to-day control over it. Under the SEBI Act, 1992, which of the following contributions is expressly excluded from being a collective investment scheme?

Contributions made as a subscription to a mutual fund are expressly excluded from the definition of a collective investment scheme under Section 11AA(3)(viii) of the SEBI Act. The other arrangements pool funds for profit without investor control, so they meet the CIS conditions or the deemed-CIS proviso.

  1. AContributions made as subscription to a mutual fundCorrect
  2. BContributions pooled by an unregistered private firm for property returns
  3. CContributions pooled under any arrangement of Rs 100 crore or more that is not registered with SEBI
  4. DContributions pooled where investors expect profits and have no control over management

Explanation

Section 11AA(3)(viii) says that an arrangement under which contributions are in the nature of subscription to a mutual fund is not a collective investment scheme. The other options describe features that satisfy the CIS conditions, or the deemed-CIS proviso for unregistered pooling of Rs 100 crore or more.

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