Business and TradeReference and Education

Collective Investment Scheme Registration

A Collective Investment Scheme (CIS) is an investment scheme in which multiple people combine their money to invest in a certain asset(s) with the intention of sharing the profits gained from the investment according to an agreement signed before the money was pooled. In other words, A collective investment scheme is an amount of money obtained by an investor by a corporation that uses these pooled contributions under a scheme or arrangement with the goal of collecting profits, income, or property and is managed on behalf of the investors.

In other words, A CIS is an arrangement or scheme that must meet certain requirements:

  • Individuals combine their funds to invest in a specific asset or collection of assets.
  • The goal is to make a profit from the money you’ve put in.
  • After that, the profits are split among the investors according to the terms of the agreement executed at the time of the investment.
  • The scheme’s operations and management are not under the control of the investors.

What is a CIS?

A Collective Investment Scheme is defined as a scheme or arrangement made or offered by a company under which the contributions or payments made by investors are pooled together with the goal of receiving income, profits, productivity, or property and is managed on behalf of the investors, according to Section 11AA (2) of the Securities and Exchange Board of India (SEBI) Act, 1992. A CIS is also called an investment trust or collective investment scheme and members combine their funds to buy a specific asset or collection of assets that they think will rise in value and benefits of a CIS The financial security of your assets. With this form of investment, there is always someone you can sell your investment to if you want to sell your portfolio.

The possibility to diversify your investments and preserve your portfolio. The ability to sell your investment anytime you want to sell your portfolio and earn a profit.

The following do not qualify as a collective investment scheme:

  1. Scheme or arrangement prepared or proposed by a co-operative society or a society that is a co-operative society registered or considered to be registered under any law related to co-operative societies in force in any State at the time;
  2. Similarly, Method or arrangement allows non-banking financial enterprises to accept deposits.
  3. Any scheme or arrangement that is a contract of insurance that is subject to the Insurance Act;
  4. Any system or arrangement made under the Employees Provident Fund and Miscellaneous Provisions Act, 1952, providing for any Scheme, Pension Scheme, or Insurance Scheme.
  5. Scheme or arrangement governed by section 58A of the Companies Act, 1956 (1 of 1956), under which deposits are accepted;
  6. A scheme or arrangement in which deposits are accepted by a business that has been registered as a Nidhi or mutual benefit society under section 620A of the Companies Act, 1956 (1 of 1956);
  7. Any scheme or arrangement that falls under the definition of chit business as described in subsection (d) of section 2 of the Chit Fund Act, 1982 (40 of 1982);
  8. In other words, Any method or arrangement in which contributions are made in the form of a mutual fund subscription;

Benefits of collective investment scheme

Investing in a collective investment scheme has the following advantages:

  • Portfolio of Securities
  • Diversification
  • Liquidity
  • Maximization of Profits

The types of CISs

Individuals can combine their money in CISs in a number of ways:

  • Company for Collective Investment Management

Companies incorporated under the Companies Act of 1956 and registered with the SEBI under the SEBI (Collective Investment Schemes) Regulations of 1999 are collective investment management companies. The regulations were created with the goal of organizing, operating, and managing Collective Investment Schemes.

  • Trustee

A Trustee is a person who holds the collective investment scheme’s property in trust for the benefit of the unitholders. A trustee follows the relevant regulations and secures the assets while also ensuring that the rules and regulations are followed. According to the CIS Regulations of 1999, a collective investment scheme must be established in the form of a Trust, and in this case, an instrument of trust would be a legally registered deed in accordance with the terms of the Indian Registration Act of 1908 and this is started by a Collective Investment Management Company on behalf of the trustees named in the instrument.

  • A fund manager

A fund manager, sometimes known as an investment manager, is a professionally certified individual who oversees the collective investment scheme’s investment decisions. Trading reconciliations, valuation, and unit pricing of the schemes are also provided by this individual.

  • Shareholder

Individuals who contribute funds to collective investment plans are referred to as unitholders or shareholders. These shareholders have rights to the assets in the schemes, as well as the revenue earned by the schemes.

Documentation is required For collective investment schemes.

A collective investment scheme company must have the following documents:

  • Information about the company’s board of directors
  • Company’s Certificate of Incorporation
  • Details on the directors’ Know-Your-Customer (KYC) status
  • Form A must be filled out completely by the applicant.
  • Annual Financial Statements – Information on Net Worth
  • Property information, whether rented or owned.
  • Association Memorandum (Objects)
  • The Company’s Articles of Association.

The registration process for the collective investment scheme

To manage collective investment schemes, an applicant must first establish a collective investment management organization. An applicant cannot operate a CIS without an effective certificate of registration, according to section 3 of the Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999.

  • Moreover, To get the certificate and grant of registration to act as a CIS firm, an applicant must first submit an application in ‘Form A.’ Any applicant who wishes to begin a scheme that would be considered a CIS must also submit a ‘Form A’ application and this would be in compliance with the act’s section 11AA criteria.
  • The applicant must additionally pay the fees for registration as a collective investment management company, according to section 6 of the act, A non-refundable charge of Rs 25,000/- is required to be paid by the application. A provisional registration fee of Rs. 5 lakh must be paid. The cost of a grant application for a Collective Investment Management Company is Rs. 10 lakh. Aside from that, the offer document filing charge is Rs. 25,000/-.
  • The Fee is Paid in a Variety of Ways. The fee must pay in the form of a bank draft made payable to “The Securities and Exchange Board of India” in Mumbai or any of the regional offices where the application is filed.
  • The board’s conditions must fulfill the criteria in the application for registration under Collective Investment Schemes. If there are any discrepancies in the application, it will be rejected.
  • If the application is rejected, the applicant must show that there is a good reason why it should be accepted. This must be completed within 30 days of the date on which the application was rejected. The applicant may be asked to furnish additional papers by the board.


In conclusion, there are a few things to consider when thinking of which fund to consider and only a few basic principles, Be open to new ideas and alternatives. In conclusion, Do your research to learn what’s out there. Don’t be afraid to stand out from the crowd.


Investors should consult CIS. In the case that investors do not receive a suitable response, they may write to SEBI and Investors can also go to district consumer redress forums if companies don’t follow through on their commitments or provide poor service. In addition, Investors can bring a criminal complaint against the beneficiary of a bouncing check under section 138 of the Negotiable Instruments Act, as the right to submit a criminal complaint belongs only to the beneficiary of the cheque.

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