There are various avenues available for investors to make better returns and collective investment schemes are one among them. Serving as a flexible savings option for corporate bodies and individual investors, these schemes serve the need of saving funds for future needs. This is defined as an arrangement or scheme offered by any company where contributions are made by investors to pool money which can be utilized to receive profits, property, income, or produce. These acquired assets (profits or property) are then monitored or looked after by a manager on behalf of the scheme investors. Investors do not have the day to day control over operations or management of such arrangements. In India, mutual funds and unit trusts are excluded from CIS.
A fund manager is a qualified expert who manages the investment resolution of the schemes. The person suggests reconciliations, trading valuation, and unit value of schemes.
Shareholders are the individuals who invest in the schemes and form a money pool for the scheme. These individuals possess a primary right over the assets of the scheme.
The Trustee must ensure that the scheme and the managers follow all the regulations and related rules. The trustee oversees that CIS regulations of 1999 are enforced effectively, and the investors’ rights are protected.
The following documents are required for registration:
The CIS companies come under the CIS regulations 1999 of SEBI. The registration certificate to CIS companies is also granted by SEBI.
No, companies accepting deposits from NBFCs, Nidhi Companies or EPF are not eligible for CIS.
After submission of the application, the SEBI reviews the application along with documents of the company. If the board finds any discrepancy in the application, then it rejects it. In case there is any relevant document that is not filed with the board, it gives the application a time of 30 days to furnish the documents. If the applicants fail to submit the required document within 30 days, then the application is rejected.
Investor’s money is pooled along with money from other investors, and it is spread over the entire range of assets within the fund. The investment during a fund is split into shares, and therefore the number of shares held to represent an investor’s proportionate ownership of the fund’s overall assets, and therefore the return on those assets generated will be shared proportionally to the ownership.
The minimum net worth required to get the Collective Investment Scheme Company Registration is Rs. 5 crores. The infrastructure of the company should also be capable enough to run the business of managing CIS.