Skip to content

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

Sunrise Ventures pools money from investors under an unregistered arrangement with a corpus of 120 crore rupees. It is not covered by any exclusion in Section 11AA(3), and it is debatable whether all four conditions in Section 11AA(2) are met. What is the position under the proviso to Section 11AA(1)?

It is deemed a collective investment scheme. The proviso to Section 11AA(1) deems any unregistered pooling of funds not covered by the exclusions in sub-section (3), with a corpus of one hundred crore rupees or more, to be a collective investment scheme, whether or not the four conditions are shown.

  1. AIt is deemed a collective investment scheme because unregistered pooling of 100 crore rupees or more is deemed soCorrect
  2. BIt is not a collective investment scheme unless all four conditions are proved
  3. CIt becomes a collective investment scheme only after SEBI issues a show-cause notice
  4. DIt is outside the definition because deeming applies only to registered schemes

Explanation

The proviso to Section 11AA(1) deems any pooling of funds under a scheme not registered with SEBI and not covered by sub-section (3), involving a corpus of one hundred crore rupees or more, to be a collective investment scheme. Here the corpus is 120 crore and no exclusion applies, so deeming operates regardless of the four-condition debate.

Did you get it right without looking?

One question tells you little. A timed set on Collective Investment Schemes shows your real accuracy, how long you take and where you lose marks.

Practise Collective Investment SchemesFree diagnostic mock

More Collective Investment Schemes questions