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

Vihaan Realty runs an unregistered pooling arrangement that raised Rs 120 crore from the public. Which statement is correct under the proviso to Section 11AA(1) of the SEBI Act?

The arrangement is deemed a collective investment scheme. The proviso to Section 11AA(1) applies to pooling not registered with SEBI and not within the sub-section (3) exclusions, where the corpus is one hundred crore rupees or more. Rs 120 crore meets that threshold.

  1. AIt is deemed a collective investment scheme, as it is unregistered, not covered by sub-section (3), and involves a corpus of Rs 100 crore or moreCorrect
  2. BIt is a collective investment scheme only if SEBI has first registered it
  3. CIt escapes the definition because it is not a mutual fund
  4. DIt is deemed a collective investment scheme only if the corpus exceeds Rs 500 crore

Explanation

The proviso deems any pooling of funds under a scheme not registered with SEBI and not covered by sub-section (3), with a corpus of one hundred crore rupees or more, to be a collective investment scheme. At Rs 120 crore, the threshold is crossed. Registration is not a precondition for the deeming.

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