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

Which of the following arrangements is expressly excluded from being a collective investment scheme under Section 11AA(3), even if it pools money and the investors lack control?

A scheme under which contributions are in the nature of subscription to a mutual fund is expressly excluded under Section 11AA(3). Other exclusions include cooperative society schemes, chit business and insurance contracts. Private land, orchard or pooling arrangements by firms, individuals or unregistered companies are not excluded.

  1. AA scheme where contributions are in the nature of subscription to a mutual fundCorrect
  2. BA land-development pooling scheme run by a private firm
  3. CA fruit-orchard scheme with produce sharing offered by an individual
  4. DA pooled scheme with corpus of fifty crore rupees offered by an unregistered company

Explanation

Section 11AA(3)(viii) excludes schemes under which contributions are in the nature of subscription to a mutual fund. The other three are private pooling arrangements with no listed exclusion, so they can be collective investment schemes if the conditions are met.

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