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

Rohan Ventures, not registered with SEBI, pools money from investors under an arrangement that is not covered by the exclusions in Section 11AA(3). The pooled corpus is Rs 120 crore. What does the proviso to Section 11AA(1) provide?

The pooling is deemed a collective investment scheme. The proviso to Section 11AA(1) deems any unregistered pooling not covered by sub-section (3), with a corpus of one hundred crore rupees or more, to be a CIS, and Rs 120 crore exceeds that.

  1. AThe pooling is deemed to be a collective investment scheme because the corpus is Rs 100 crore or moreCorrect
  2. BThe pooling is exempt because only registered entities can run a CIS
  3. CThe pooling is a CIS only if investors have day-to-day control
  4. DThe pooling is a CIS only after SEBI notifies it

Explanation

The proviso deems any unregistered pooling, not covered by sub-section (3), with a corpus of one hundred crore rupees or more to be a CIS. Rs 120 crore exceeds the threshold, so the deeming applies.

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