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CS Executive · Capital Market and Securities Laws · Mutual Funds

Sunrise Funds Pvt Ltd starts sponsoring a pooled investment scheme that is a mutual fund and runs it for several days without obtaining the SEBI certificate of registration that the law requires. Which provision of the SEBI Act, 1992 directly applies to this default?

Section 15D(a) of the SEBI Act, 1992 applies. It penalises any person who sponsors or carries on a collective investment scheme, including mutual funds, without obtaining the SEBI certificate of registration that the Act, rules or regulations require.

  1. ASection 15D(a), which penalises sponsoring or carrying on a collective investment scheme, including mutual funds, without the required registrationCorrect
  2. BSection 15D(c), which penalises failure to apply for listing of schemes
  3. CSection 15JA, which prescribes the penalty for unregistered schemes
  4. DSection 11AA(3), which makes such a scheme a lawful mutual fund

Explanation

Section 15D(a) covers a person who is required to obtain a certificate of registration for sponsoring or carrying on a collective investment scheme, including mutual funds, and does so without it. Section 15D(c) concerns listing applications, 15JA only deals with crediting penalties to the Consolidated Fund, and 11AA(3) excludes genuine mutual fund subscriptions from the CIS definition rather than legalising unregistered activity.

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