The Hindu Business Line : Collective investment schemes -- SEBI relaxes norms for provisional registration

THE Securities and Exchange Board of India (SEBI) has relaxed the conditions to be adhered to by the existing collective investment schemes (CIS) seeking provisional registration with the capital market regulator.

The SEBI (Collective Investment Schemes) Regulations 1999 had stipulated that any person operating a CIS prior to the commencement of this regulation should make an application to the board for grant of a certificate within a period of two months from such date.

The capital market regulator had then barred the existing CIS from launching any scheme or raising money from investors even under the existing scheme, unless the board granted a certificate of registration.

The regulations had, however, provided that the board may grant provisional registration to the existing CIS subject to certain conditions being fulfilled within a period of one year from the date of grant of provisional registration.

According to industry sources, SEBI has now amended its CIS Regulations 1999 to allow grant of provisional registration subject to the fulfilment of the stipulated conditions within a time period of two years (as against the earlier specified time period of one year) from the date of grant of provisional registration.

As part of the conditions, SEBI had in its CIS Regulations 1999 stipulated that applicants seeking provisional grant of registration should get their existing schemes rated by a credit rating agency, audited by an auditor and appraised by an appraising agency within one year from the date of grant of provisional registration.

The applicants were also required to create a trust and appoint trustees in the manner specified under the regulations. Further, the existing CIS were required to comply with the valuation and accounting norms specified in the regulations within a period of one year from the date of grant of provisional registration.

SEBI has, however, in the latest amendments, not effected any changes to the condition that required the applicant to meet the minimum net worth of Rs 1 crore within one year from the date of grant of provisional registration. The capital market regulator had further held that the net worth should be increased by Rs 1 crore each within two years, three years, four years and five years from the date of grant of provisional registration.

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