What is a Collective Investment Scheme (CIS) - CS Executive

Collective Investment Scheme (CIS) - CS Executive

A collective investment scheme is a scheme that comprises a pool of assets that is managed by a collective investment scheme manager and is governed by the Collective Investment Schemes Regulations given by SEBI. Now, let’s get to know more about the need for the Collective Investment Scheme – SEBI, its regulatory framework, its obligations to perform, restrictions and submission of information and documents, Trustees and their obligations, etc.

The history of CIS dates back a few decades. During the 1990s there were various instances of collection of money by numerous agro-based and plantation companies promised around 18-30% returns, which eventually failed to provide any return on the investments including the repayment of the principal amount.

Eventually, the Government of India decided that an appropriate regulatory framework for regulating entities that issue instruments like agro bonds, plantation bonds etc., will be put in place. The government decided that the schemes through which such instruments are issued would be treated as “Collective Investment Schemes” (CIS) coming under the provisions of the SEBI Act.

In 1997 SEBI, prohibited collective investment schemes from sponsoring any new scheme till the CIS regulations are notified. Subsequently, the notification of SEBI (Collective Investment Schemes) Regulations 1999 was issued on October 15, 1999.

Click to read Section 11AA of the SEBI Act

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