• PAGE ONE
• INDEX
• HOME

Listing of `collective investment' units allowed

K.R. Srivats

Shaji Vikraman

NEW DELHI, Aug. 13

THE Government has permitted listing of the units or any other instrument of a collective investment scheme (CIS) on a recognised stock exchange.

The Finance Ministry's decision to allow a collective investment management company (CIMC) to get its collective investment scheme listed on a stock exchange is aimed at providing liquidity to the unit holders of such schemes.

A collective investment scheme basically refers to contributions or payments made by investors which are pooled and utilised with an aim to receive profits, income, produce or property from the scheme or arrangement. One form of this is the schemes formu lated by some plantation and teak companies in India.

According to a notification issued by the Ministry, at least 25 per cent of the units or any other instruments issued by the company under a scheme would have to be offered to the public for being eligible for listing. Units of collective investment sche mes are now treated as securities along with shares, debentures and derivatives.

Earlier, investors of such schemes had no recourse to recovery of money invested by them during the life of the scheme as there was no exit route apart from the company itself agreeing to buy back the units or other products.

The other norms which the CIMC will have to adhere to include providing an undertaking that letters of allotment of units or any other instruments will be issued simultaneously, ensuring that letters of rights is issued simultaneously and providing for s ub-division or consolidation or renewal through the clearing house of the exchange.

Further, the CIMC will have to provide a list of the ten highest holders of units of each scheme of the company while seeking approval for listing of the units. Companies promoting collective investment schemes and which are seeking listing will have to furnish to the stock exchange copies of balance sheets and audited accounts for the last five years. In the case of new companies, copies of balance sheets and audited accounts will have to be submitted for such completed financial year for which account s have been made.

The guidelines say that a recognised stock exchange may relax the mandatory norm of 25 per cent of the offer to the public with the approval of SEBI for schemes floated by a Government company.

Besides this, the total subscription to the units or any other instruments, which are sought to be listed, by the Union Government, State Government, development or investment agency of a State Government, IDBI, IFCI, ICICI, LIC, GIC and its subsidiaries or the UTI will not be taken into account while calculating the 25 per cent public offer.

The Finance Ministry has also through the notification permitted a company whose security has been de-listed for over three months, to appeal to the Securities Appellate Tribunal (SAT) against the order of the stock exchange.