SEBI notifies rules to strengthen regulatory framework for Collective Investment Scheme
The Hindu
The markets regulator has mandated a minimum of 20 investors and a subscription amount of at least ₹20 crore for each Collective Investment Scheme
To strengthen the regulatory framework for collective investment schemes, Securities and Exchange Board of India (SEBI) has enhanced the net worth criteria and track record requirements for entities managing such schemes.
Also, the markets regulator has mandated a minimum of 20 investors and a subscription amount of at least ₹20 crore for each Collective Investment Scheme (CIS), according to a notification on May 10.
Currently, CIS rules do not mandate minimum number of investors, maximum holding of a single investor or minimum subscription amount.
In addition, the regulator has put a cap on cross-shareholding in Collective Investment Management Company (CIMC) to 10% to avoid conflict of interest .
To give this effect, the SEBI has amended CIS regulations. The rules, first notified in 1999, have not been reviewed since then. The move comes after the board of SEBI approved a proposal in this regard in its board meeting in March.
The new rule is aimed at strengthening the regulatory framework for collective investment schemes as well as empower the CIMCs to effectively discharge their responsibilities towards the investors.