COLLECTIVE INVESTMENT SCHEME

                                   COLLECTIVEINVESTMENT SCHEME

COLLECTIVE INVESTMENT SCHEME is an investment scheme, where several individuals come together to pool their money for investing in particular assest and sharing the return arising from the investment made.
A unit certificate issued under scheme should be transferable and must be listed.

• CIS refers to any scheme under which-
• The contribution are pooled and utilized for the purpose of scheme or arrangement.
• Investors investing into such scheme with view to receive profits, incomes, produce or property whether movable or immovable.
• The property, contribution, or investment forming a part of scheme, is manged on the behalf of investor.
• The investor do not have day to day control over the management of scheme.

• CIS DOES NOT INCLUDE FOLLOWINGS:
• Any scheme made or offered by Co-oprative society.
• A contract of insurance.
• Pension scheme or any insurance scheme.
• Deposit accepted by NIDHI COMPANY OR NBFC.
• Deposit accepted under section 74 of companies act 2013.
• Chit business.
• Mutual fund.

• CONDITION FOR SETTING UP A CIS:
1. Application for registration should be accompanied by non-refundable fee and send it to SEBI.
2. Applicant should be company and registered under co.act 2013.
3. Managing CIS is one of its main objective in MOA.
4. Net worth not less than 5cr. (REFER THE LATEST AMENDMENT)
5. The director or KMP have not been convicted for an offence which involve moral turpitude or economic offence or any violation of security law.
6. At least 50% of directors of such CIS should be an independent directors.

• RESTRICTIONS ON BUSINESS ACTIVITIES:
Colletive investment management company should not undertake following activities:
• Undertake any activity other than managing scheme.
• Act as trustee of any scheme.
• Launch any scheme for the purpose of investing into securities market.
• Investment in own scheme unless proper disclousure is given.

• TERMINATION OF TRUSTEESHIP:
• The trusteeship of trustee should come to an end-
1. If trustee ceases to be trustee under SEBI(DEBENTURE TRUSTEES)Regulation,1993; or
2. If trustee is in the course of being wound up; or
3. If unit holder holding at least Three-fourths of the nominal value of the unit capital of the scheme pass a resolution for removing the trustee and SEBI approves such resolution; or
4. If in the interest of the unit holder, SEBI, for reason in writing decides to remove the trustee for violation of act or regulation.
5. Trustee himself, giving notice not less than 3months expressing intention of not to continue as trustee.

• RIGHTS AND OBLIGATION OF TRUSTEE:
❖ The trustee should ensure that the CIMC has:
✓ The necessary office infrastructure.
✓ Appointed all key personnel including mangers for the schemes.
✓ Appointed auditors from list of auditors approved by SEBI.
✓ Appointed registrars to an issue and share transfer agent.
✓ Taken adequate insurance for the assests of the scheme.
✓ Minimum net worth on continuous basis.
✓ Prepare compliance manual.

• OBLIGATIONS OF CIMC
➢ Every CIMC should-
1. Be responsible for managing the funds or properties of CIS on behalf of the unit holder.
2. Take all responsible steps and exercise due diligence.
3. Appoint registrars and share transfer agent
4. Give receipts for all monies received and report of receipts and payments to SEBI.
5. Holding board meeting of directors to consider the affairs of CIS ,at least twice in every three months.
6. Obtain adequate insurance against the properties of the CIS.

➢ COLLECTIVE INVESTMENT SCHEME PROPERTY INCLUDES: Subscription of money or money’s net worth(including bank deposit) Or Property acquired,directly or indirectly Or Income arising, directly or indirectly from, subscription money.

NOTE : THIS NOTES ARE MADE ONLY FOR REVISION PURPOSE.
FOR MORE REVISION NOTES MAILED AT : jaydave096@gmail.com