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CS Executive · Capital Market and Securities Laws · Securities Market Intermediaries

Orbit Insurance sells a unit linked insurance policy that has an investment component alongside insurance cover. Under the Explanation to Section 12 of the SEBI Act, 1992, how is this product treated for the purpose of the section's registration requirement for collective investment schemes and mutual funds?

A unit linked insurance policy issued by an insurer is not treated as a collective investment scheme or mutual fund for Section 12. The Explanation expressly excludes instruments that combine an investment component with insurance, so the registration requirement for such schemes does not apply to it.

  1. AIt is a collective investment scheme and Orbit needs SEBI registration
  2. BIt is a mutual fund only if units are listed
  3. CIt is not included in a collective investment scheme or mutual fund for this sectionCorrect
  4. DIt is included only if the insurer holds an AIF registration

Explanation

The Explanation states that for the purposes of the section, a collective investment scheme or mutual fund does not include any unit linked insurance policy or similar instrument that provides an investment component besides insurance, issued by an insurer. So Section 12 registration for CIS or mutual funds is not triggered by that product.

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