Skip to content

CS Executive · Capital Market and Securities Laws · Mutual Funds

Veda Capital Pvt Ltd wishes to launch a mutual fund in India and begins collecting money from investors under a pooled scheme without approaching SEBI for any certificate. Under the SEBI Act, 1992, what is the legal position?

A person must obtain a certificate of registration from SEBI, in accordance with the regulations, before sponsoring or carrying on a mutual fund. Operating without it is prohibited under the SEBI Act, and no later filing, amount threshold or exchange approval can cure the absence of registration.

  1. AIt may carry on the scheme freely if it files annual accounts with SEBI later
  2. BIt must first obtain a certificate of registration from SEBI before sponsoring or carrying on the mutual fundCorrect
  3. CIt needs registration only if the pooled amount exceeds one crore rupees
  4. DIt needs only the approval of the stock exchange where units will be listed

Explanation

Section 12(1B) states that no person shall sponsor or carry on any collective investment scheme including mutual funds unless he obtains a certificate of registration from the Board in accordance with the regulations. Later filings, thresholds or exchange approval do not replace this requirement.

Did you get it right without looking?

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

Practise Mutual FundsFree diagnostic mock

More Mutual Funds questions