RBI Notification: Revised Guideline...
The Reserve Bank of India announced revised guidelines for Core Investment Companies mandating...
A Collective Investment Scheme (CIS) is a system where a number of individuals mutually pool their money for the purpose of inventing it in a particular asset. Further, when profits are arising out of that particular investment, it gets shared between the investors as per the finalized agreement, prior to the act. This collective investment scheme is prescribed under Section 11AA of the Securities and Exchange Board of India Act of 1992.
A Collective Investment Scheme (CIS) means that any course of action or a plan which satisfies the conditions mentioned in Section 11AA of the SEBI Act comes under the definition of CIS. It further provides arrangements and plans offered by any company in which payments or the contribution are made and pooled by the group of investors and further utilize it with a view to receiving profits. It is further supervised on behalf of the Investors in a CIS.
SEBI regulation on the collective investment scheme illustrates a Collective Investment Management Company which means a corporation incorporated under the Companies Act 2013 and also enrolled with the Securities Exchange Board of India, whose purpose is to manage, deal, work, and arrange CIS.
No Company, other than the Collective Investment Management Company which has obtained all the necessary certifications under the guidelines should only be allowed to support and continue the collective investment scheme.
The Collective Investment Scheme will incorporate:
The following are eligible to become a participant of collective investment schemes:
The Collective management corporations are the companies that are incorporated under the companies’ act of 1956 and are further registered with SEBI’s regulation on the CIS of 1999. The primary objective of the regulation was to manage, operate, and organize these collective investment schemes in India.
A Fund manager is an expert and qualified person whose duty is to manage the investment resolution of the collective investment schemes. The person suggests trading valuation, reconciliations, and also the unit value of the schemes.
A Shareholder is an individual who invests funds in the collective investment scheme. There are also known as the backbone of this scheme. These individuals have the primary right to that particular asset which is engaged in the scheme
A trustee is an individual whose main purpose is to hold the CIS in the trust to give its advantages to the unit holder is called Trustee. It is the duty of the trustee to work in accordance with the relevant regulation and ensure that rules and regulations have complied. The CIS is established as trust is respect to the CIS Regulations of 1999. A collective investment company initiates this support for the trustees named in the instrument. Furthermore, a business might appoint a trustee for the benefit of its investors and holds the assets of collective investment schemes.
These following schemes are not treated as CIS:
The following are the qualified standard to register for CIS:
Read our article:Redressal Mechanism and Penalty Provisions against Collective Investment Management Company (CIMC)