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

Sunrise Agro Pools, unregistered with SEBI, runs a pooling arrangement with a corpus of Rs 120 crore. It does not fall within any exempted category in Section 11AA(3). Under the proviso to Section 11AA(1), how is this arrangement treated?

It is deemed to be a collective investment scheme. The proviso to Section 11AA(1) deems any unregistered pooling not covered by sub-section (3) and involving a corpus of Rs 100 crore or more to be a scheme, without needing to prove the sub-section (2) conditions.

  1. ADeemed to be a collective investment scheme because the corpus is Rs 100 crore or moreCorrect
  2. BTreated as a mutual fund because of its size
  3. CNot a scheme unless all four conditions of sub-section (2) are proved
  4. DExempt because only registered entities can be schemes

Explanation

The proviso says any pooling of funds that is not registered with the Board or covered under sub-section (3), with a corpus of Rs 100 crore or more, is deemed a collective investment scheme. The corpus is Rs 120 crore and no exemption applies, so the deeming applies even without proving the sub-section (2) conditions.

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