Collective Investment Schemes Registration
The meaning of the collective investment schemes is informed in its name. It is the investment in which many individuals come together to pool their money in the particular asset or the property and they also share the returns or profit from the investment according to the agreement they sign before investing their money in the asset. Many countries also have schemes like a collective investment scheme eg. In the UK Union Trust Scheme is the collective investment scheme. For a better understanding of the collective investment schemes government announced the act in which you will find detailed information about the cis.
The definition of cis is given in section 11AA of the SEBI Act, 1999. The collective investment schemes are regulated under the SEBI regulations, 1999. In the definition of cis Sebi, mutual funds are excluded to make it more clear. You should also know that in section 11AA you will find the particular conditions in which you can call it a collective investment scheme Sebi. Following are the conditions mentions in section 11AA –
When the investors pool money for the asset this money has to be used only for that particular scheme or arrangement.
The payments made by the investors in the arrangement or scheme are to receive the profits from that scheme.
The scheme or arrangement in which the investors are investing their money should be handled by investors.
The investors don’t have any power to control the management and operations of the scheme or arrangement.
Collective Investment Scheme Participants
Collective Investment Management Company
The collective investment management company is developed under the provisions of the companies act, 1956. It is also registered with the SEBI. The registration took place under the SEBI regulations, 1999. The work of the collective investment management company is to organize, operate and manage the collective investment scheme Sebi.
Shareholder
You can also call this shareholder a unitholder. Shareholders have rights to the assets of collective investment schemes and they also have the share in the profit which comes from the schemes. The work of the shareholder is just only to invest their money in the asset.
Trustee
A trustee is a person who carries the asset of the collective investment schemes in the trust for the benefit of the several investors who invest their money in the scheme. The trustee will work for the scheme or protect the asset. The trustee has to follow all the rules and regulations under the SEBI regulations, 1999. As per the cis-regulation act, 1999 collective investment schemes must have trust because it is essential.
Fund Manager
The fund manager is one of the essential parts of the collective investment scheme Sebi. The fund manager is professionally qualified and they manage the decisions related to the investments in the collective investment schemes. They will give you advice regarding the valuation or pricing of the scheme which will increase the profit of the scheme.
Eligibility For Registration of Collective Investment Management Company
There exist a lot of eligibility criteria for the registration of Collective Investment Management Company and the first one among them is that the company should be compulsorily enlisted in the Companies Act of the year 1956.
The applicant should also include the Collective Investment Scheme as their principle or major objective of the Memorandum of Association and this should be properly indicated to the administration in the first place.
Also, the requirement of assets with the respective applicant is at least INR 5 Crore. More than INR 5 crore assets can also be considered in the eligibility criteria.
Eligibility For Appointment as a Trustee
To become an authorized Trustee, you should have sincerity and honorable behavior in you and this is the most important thing that matters for an employee as well as a trustee. Also, proper knowledge of the respective field is a must in those people and this correlates with the expertise in it as well.
Rules and Regulations
The first and most important rule of being availed of the Collective Investment Scheme is to abide by all the processes and sequences of the process. The CIS certification is also compulsory for those who want to apply for this scheme or be able to avail of this scheme.
Also, a Collective Investment Management Company should share all the basic information with its clients before dealing with them and this is the most important rule of CIS. Along with this, the company cannot make an appointment with any new or existing client without the consent of the trustees of that respective company.
Conclusion
All the above information will provide you with great knowledge about the collective investment schemes and the concepts involved in the cis. In simple words, the collective investment scheme is the scheme in which many individuals pool their money in an asset to get a great profit. There are several acts in which you will find detailed information about it.
References
https://www.sebi.gov.in/sebi_data/faqfiles/jan-2017/1485846814724.pdf
http://www.arthapedia.in/index.php%3Ftitle%3DCollective_Investment_Scheme_(CIS)
FAQs
Which schemes do not treat as collective investment schemes?
Following are the conditions in which the schemes are not treated as the cis sebi –
The schemes which are offered by the co-operative societies.
The schemes allow the deposits of non-banking financial companies.
The schemes to which the insurance act applies to their contract of insurance.
The scheme or arrangement provides their funds to other schemes such as the pension scheme or insurance. You should know that this scheme is framed under the employee provident act.
The scheme that accepts the deposits under section 58A companies act, 1956.
The scheme or arrangement that accepts the deposit from the company that declared it as a Nidhi or mutual benefit society.
The scheme that is falling in the meaning of cheat business.
What is the collective investment management company and what it does?
The collective investment management company is developed under the provisions of the companies act, 1956. It is also registered with the SEBI. The registration took place under the SEBI regulations, 1999. The work of the collective investment management company is to organize, operate and manage the collective investment scheme Sebi.
What is a trustee in the collective investment scheme?
A trustee is a person who carries the asset of the collective investment schemes in the trust for the benefit of the several investors who invest their money in the scheme. The trustee will work for the scheme or protect the asset. The trustee has to follow all the rules and regulations under the SEBI regulations, 1999. As per the cis-regulation act, 1999 collective investment schemes must have trust because it is essential.
What is a fund manager?
The fund manager is one of the essential parts of the collective investment scheme Sebi. The fund manager is professionally qualified and they manage the decisions related to the investments in the collective investment schemes. They will give you advice regarding the valuation or pricing of the scheme which will increase the profit of the scheme.
What is the shareholder in the collective investment scheme?
You can also call this shareholder a unitholder. Shareholders have rights to the assets of collective investment schemes and they also have the share in the profit which comes from the schemes. The work of the shareholder is just only to invest their money in the asset.
What are the eligibility criteria for the registration of collective investment schemes?
Following are the eligibility criteria for the registration of cis –
If you want to register in the cis then you have to register as a company under the companies act, 1956.
If you are the applicant, you have to mention collective investment management as one of your objects in the memorandum of association.
The applicant has to be perfect and fit for the registration cis.
Applicants have to have their net worth around INR 5 crores. If currently, you have a net worth of around INR 3 crores then in further 3 years your net worth should increase up to INR 5 crores from the date of registration.
The applicant has to have enough infrastructure by which they can operate the collective investment scheme according to regulations of cis Sebi.
The applicant has to have honesty and integrity with great experience in the reacted field.
If the applicant is related to the individual who has been rejected from the board of the collective investment scheme.
What are the basic rules and regulations for the collective investment scheme?
Following are some basic rules and regulations which collective investment company has to follow –
Every collective investment scheme must be developed as per the cis regulations.
An only a collective investment management company with the registration certificate can go on or launch the cis.
As per the Sebi regulations, the collective investment management company has to share its operations with the shareholders not daily but to tell them where they sat with the scheme.
The collective investment management company has only the rights to operate the scheme; they can't take part in any other activities other than the scheme.
Every decision of the scheme has to be made with the advice of the trustee of the scheme.
The collective investment management company also can’t give a guarantee to any shareholder about the profit of the scheme.