In light of a lot of news relating to sham entities garnering funds through fraudulent investment schemes with promise of huge returns mainly in the name of property development and agriculture, SEBI has in the last few years, intensified its scrutiny of investment structures that raise domestic capital on an unregulated basis. Securities Appellate Tribunal recently passed an order upholding SEBI’s findings against Alchemist Infra Reality Limited. The SAT order along with recent pronouncement by the Supreme Court have probed unregulated investment arrangements to conclude whether or not they constitute CIS, as Schemes are required to be registered with SEBI in pursuance to Securities And Exchange Board Of India (Collective Investment Schemes) Regulations, 1999

1. EquiCorp Associates
Advocates & Solicitors
Collective Investment Scheme & SEBI
www.equicorplegal.com

2. Collective Investment Scheme
 An investment scheme
wherein several individuals
come together to pool their
money for investing in a
particular asset(s) and for
sharing the returns arising
from that investment as per
the agreement reached
between them prior to
pooling in the money

3. Is CIS a Ponzi Scheme???
 Many companies especially in semiurban and rural areas are accepting
deposits in their firm’s name and
also promising two to three times
returns in two to four years without
taking any legal permissions. These
ponzi schemes are running on the
false promise of doling out high
returns to the gullible investors.
Ponzi scheme may be treated as
either a chit fund or a collective
investment scheme. But then a
further complication arises who will
regulate a ponzi scheme????

4. SEBI’s Action
 In light of a lot of news relating to sham entities garnering funds through
fraudulent investment schemes with promise of huge returns mainly in
the name of property development and agriculture, SEBI has in the last
few years, intensified its scrutiny of investment structures that raise
domestic capital on an unregulated basis. Securities Appellate Tribunal
(hereinafter the “SAT”) recently passed an order upholding SEBI’s
findings against Alchemist Infra Reality Limited. The SAT order along
with recent pronouncement by the Supreme Court have probed
unregulated investment arrangements to conclude whether or not they
constitute CIS, as Schemes are required to be registered with SEBI in
pursuance to Securities And Exchange Board Of India (Collective
Investment Schemes) Regulations, 1999 (hereinafter referred to as the
“Regulation”).

5. 
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Maitreya Services Private Limited
SEBI issued an order in March 2013 against the company in
March 2013 directing to wind up its CIS and refund the
money to its subscribers.
SEBI barred the company and its directors from the
securities market till the time all its CIS were wound up and
decided to initiate prosecution proceedings against them.
Charges like offences of fraud, cheating, criminal breach of
trust and misappropriation of public funds have been filed.
Securities Appellate Tribunal (hereinafter referred to as
“SAT”) upheld the SEBI order against SAT

6. 
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Alchemist Infra Realty Limited
The Company accepted contribution from investors for collective utilization and
pooled the investment with the object of carrying out the overall scheme/
arrangement because the Company had the discretion to allot such area in its
project as it considered appropriate. Further, under a conveyance deed the area
of plot for each individual was denoted as ‘proportionate undivided interest’.
The purchaser was thus not entitled to claim division and/or partition of the said
proportionate undivided interest. The purchasers could not either interfere with
the working, managing, controlling and supervising of the said plot in any
manner whatsoever.
This in SEBI’s view, were not limbs of a buy-sell arrangement, but a pooling of
money pursuant to a scheme or arrangement.
Based on these findings, SEBI concluded that the company’s activity were in the
nature of a CIMC and held it to be in violation of the Regulation as the company
didn’t have the requite approvals from SEBI.
SEBI accordingly passed directions to the Company and its directors to wind up
the existing Scheme and further ordered the Company to refund all the collected
money.
SAT confirmed SEBI’s finding and upheld the SEBI order under appeal which
was made by the Company and its directors, by adopting the reasoning similar to
that provided by SEBI in the SEBI order.

7. Collective Investment Scheme
or CIS
 CIS is defined in Section 11AA of the Securities and Exchange Board of
India Act, 1992 (hereinafter referred to as the “Act”) as per which CIS is
any scheme made or offered by a company under which –
 Contribution made by individuals are pooled and utilized solely for a
common scheme or arrangement;
 Contributions and payments made by individuals with a view to receive
profits, income, produce or property, whether movable or immovable
from such scheme or arrangement;
 Property, contribution or investment forming part of scheme or
arrangement, whether identifiable or not, is managed on behalf of the
investors; and
 Investors do not have day to day control over the management and
operation of the scheme or arrangement.

8. Exclusions to CIS
 There are many types of schemes and arrangements to collect funds from individuals
which has been excluded by SEBI from the definition of CIS. CIS will not include
schemes and arrangement –
 Offered by Co-operative Societies or societies registered under any state or central
act;
 Offered by Non-Banking Financial Companies to accept deposits;
 Contract of insurance to which Insurance Act applies;
 Providing for pension or insurance schemes under Employees Provident Fund and
Miscellaneous Provisions Act, 1952;
 Under which deposits are accepted under Section 58A of the Companies Act, 1956;
 Under which deposits are accepted by a company declared as a Nidhi or a mutual
benefit society under section 620A of the Companies Act, 1956;
 falling within the meaning of Chit business as defined in clause (d) of section 2of the
Chit Fund Act, 1982; and
 Under which contributions made are in the nature of subscription to a mutual fund.

9. Collective Investment Management
Company or CIMC
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As per the Regulation no other entity other than a CIMC registered with SEBI can launch a CIS.
The eligibility criteria for an entity to be granted SEBI approval for operating as a CIMC are as
follows:Registered as a company under the Companies Act, 1956;
Memorandum of Association specifies managing of CIS as one of its main objectives;
Net worth of not less INR 5 crores, provided at time of making application the net worth can be
INR 3 crores which is to be increased by applicant to INR 5 crores within three years of date of
registration as a CIMC;
Fit and proper person for grant of such certificate;
Has adequate infrastructure to enable it to operate CIS in accordance with the provision of these
regulations;
Directors or key personnel shall have relevant experience and have not been convicted for an
offence involving moral turpitude or for any economic offence or for the violation of any
securities laws;
At least 50 percent of the directors are independent;
No person directly or indirectly related to the applicant entity has been refused registration by
SEBI under the Act; and
At least one director not subject to retirement is representative of the trustee.

10. Setting up a CIMC

11. Launch a CIS
As per the Regulation, a CIS shall only be constituted in the form of a
trust and the instrument of trust shall be in the form of a deed duly
registered under the provisions of the Indian Registration Act, 1908 (16
of 1908) executed by the CIMC in favour of the trustees named in such
an instrument. The trustee shall hold the assets of the Scheme for the
benefit of the unit holders.
 Credit Rating and Appraisal Requirement - No scheme shall be launched
by the CIMC without obtaining rating from a credit rating agency
(“CRA”) and getting the CIS appraised by an appraising agency
(“Appraising Agency”). CRA as per the Regulation means a body
corporate registered under Securities and Exchange Board of India
(Credit Rating Agencies) Regulations, 1999. Appraising Agency means
an agency empanelled with the SEBI for the purpose of conducting
technical or financial appraisal of the CIS. Appraising Agent’s appraisal
report shall form part of offer document.

12. Launch a CIS
contd.
 Close ended scheme and duration – CIS has to be a close ended scheme
with duration not lesser than three years.
 Insurance – CIMC to obtain insurance for protection of CIS’ property.
 Returns – CIMC shall not provide guaranteed returns. Offer document can
only mention indicative returns assessed by Appraising Agency.
 Filling Fees – CIMC to pay filling fees to SEBI as prescribed in the
Regulation;
 Disclosure in offer document - Offer Document has to contain
information as set forth in Sixth Schedule of the Regulation and all
information provided shall be true and enable investors to take an informed
decision. SEBI may in interest of investors require CIMC to carry out
changes to the offer document. CIMC can file offer document if SEBI
doesn’t suggest any changes within 21 days from date of filling.

13. Launch a CIS
contd.
 Advertising material – Advertisement in respect of CIS have to comply
with code provided in Seventh Schedule of the Regulation and shall
disclose investment objectives and periodicity of valuation of the CIS
property.
 Offer period – CIS shall not be open for more than 90 days for
subscription.
 Allotment of units and refunds of money – CIMC to disclose in offer
document the minimum and maximum subscription amount under the CIS
along with allotment process in case of oversubscription. Application
money has to be refunded within six weeks of closure of subscription list if
CIS fails to receive minimum subscription.
 Unit Certificates – CIMC has to issue unit certificates to accepted
applicants no later than six weeks from date of closure of subscription list.

14. Launch a CIS
contd.
 Transfer of Units – Unit certificates shall be freely transferable and CIMC
shall register any such transfer within thirty day of production of unit
certificate along with instrument of transfer.
 Account and utilization of money – Subscription amount received shall be
kept in a separate bank account in name of the CIS and shall be utilized
only for the objectives of the CIS.
 Listing of CIS - The units of every CIS shall be listed immediately after the
date of allotment of units and not later than six weeks from the date of
closure of the CIS on each of the stock exchanges as mentioned in the offer
document.

17. Consult the Experts
Complete assistance for making the necessary filings,
applications etc. for obtaining SEBI’s approval to operate
as CIMC and to launch CIS.
Informal discussion with contact personnel within SEBI
so as to perfect the
application before the same is
submitted.
Follow up support at various points in time during and
after the pendency of the application so as to ensure that
any additional documents/records requested by SEBI is
submitted in a systematic and timely manner.
 Updating Company on a regular basis as to the status of
the pending application.

19. About Us

Equi Corp Associates (ECA) is a mission driven, start-up law practice based in New
Delhi, India and founded in 2012 for providing affordable access to legal counsel
benefitting start-ups, small and growing businesses, social business enterprises, impact
investors and non-profit organizations. Our boutique service offerings are primarily at the
intersection of start-up, sustainable development, social enterprise and investment
sectors, designed to help clients wade through laws that were not originally designed
with them in mind.

The basic idea behind starting ECA was to be a part of India’s growth by reaching out to
novel start-ups and established businesses, and helps them adapt best global
practices/technologies in local conditions and in advising them about legal aspects
involved in modern markets in order to keep our clients in pace with the dynamic
competitive environment.

ECA is instrumental in advising various social enterprises and start ups in setting up
their business in India.

ECA not only having some of the best legal minds, but the best business minds too:
lawyers are intimately familiar with the business environment, and know the emerging
risks and opportunities of their industries and practice groups.

20. ECA’s Network Presence
Dehradun
Delhi/NCR
Jaipur
Allahabad
Guwahati
Kolkata
Mumbai
Hyderabad
ECA
Bangalore
Chennai
Our Associated
Office

21. WHY Equi Corp Associates??
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ECA is a multispecialty law firm, with its founding partners having a vast
experience for providing legal services to a variety of domestic & international
clients, corporations, financial entities & government agencies.
Our respected clients - from individuals to small businesses to Fortune 500
companies -- turn to us for trusted legal counsel.
ECA is equipped with required professional setup of Qualified, Experienced and
Knowledgeable members.
We advise and assist NRI’s/PIO’s, Foreign Investors and Indian entrepreneurs
with legal services that enables them to compete with best in world in the
modern economy characterised by technology based, venture capital funded,
futuristic businesses governed by complex and ever evolving legal and
statutory framework.
ECA is also effective in providing match making partner/locating strategic
alliance, follow up and representation with Government of India or any other
incidental work related to investment or legal guidance in India.

22. The Verticals
•
Corporate & Commercial
•
Banking & Finance
•
Real Estate
•
Infrastructure & Project Finance
•
Employment & Labour
•
Media, Sports & Entertainment
•
Litigation & Arbitration
•
Tax & Consulting
•
Intellectual Property
The Firm specializes in verticals such
as IT, ITES, Bio-tech, Power, Water,
Retail Trade, Education, Mining,
Aviation,
Tourism,
Insurance,
Telecom, Media & Entertainment

23. Corporate & Commercial Services
 Foreign Investment in India / Abroad
 Drafting and vetting of Joint Venture Agreements, Corporate
Agreements, Management Agreement, Cross border transaction
agreements etc.,
 Compliance Audit, Due Diligence & Transaction Advisory;
 Formation & structuring of business entities;
 Mergers & Acquisitions & Private Equity;
 Competition & Fair Trade Practice;
 Corporate Governance & Restructure;
 Venture Fund, Mutual Fund, RE Trust Funds.

24. Banking & Finance Services
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Credit Co-operative & Financial Institutions;
Quasi Banks & Nidhi Companies;
Urban Credit Co-operative Banks;
Micro Finance Institutions;
Banks & NBFCs and other Financial Intermediaries;
Alternative Investment Funds;
Real Estate Finance including Collective investment
Schemes;
Structured & Asset Finance;
National Pension Scheme
Securitization;
Debt recovery

25. Real Estate Services

Title Search & Property transactions

Joint ventures in Real Estate

Build to suit campuses

Development of Technology Parks,
Integrated Townships, Warehouse &
Logistics Parks, SEZ, Hotels,
Multiplexes Entertainment Centres,
Slum Developments, Rehabilitation
Projects etc.

Sale deeds

Lease, Leave and License Agreements

Gift deeds

Mortgage & Finance Agreements

26. Infrastructure & Project Finance Services
 Transaction Advisory: Energy, Oil and Gas, Highway, Road,
Airport, Ports, Water & Sanitation and Telecommunications
 Drafting, negotiations and review of financing & security
documents
 Tender Documents, Bidding process, PPP, Concession
Contracts, PPA, EPC Contracts
 Government Approvals & Liaisoning with statutory
authorities
 Structuring, negotiation & documentations of projects

27. Employment & Labour Services
 Appointment/Offer letters, Termination practices
 Employee Stock Option Plan
 Employee Handbook
 Labour Compliance
 Service Bonds
 Standing Orders & Service Rules
 Migration & Emigration of Employees
 Country specific employment relation
 Grievance Settlement Procedures

28. Media, Sports & Entertainment Services
 Television & News Channel;
 Media & Production Houses;
 Endorsements, Distribution, Event Sponsorship,
Venue, Marketing Rights, Merchandise Agreements;
 FM Radio Channels;
 Publishing House;
 Studios;
 Sports Club

29. Litigation & Arbitration Services

Commercial Litigation

Recovery/Enforcement

Civil Litigation

Medical Negligence

IP Litigation

Arbitration

White Collar Crimes

Economic Offences

Bankruptcy/Insolvency

Criminal Litigation

30. Tax & Consulting Services
 Company Secretarial Services:
- Incorporation of companies/branches/liaison
office/representative office
- Maintenance of Secretarial Record and recurring
secretarial services
- Registration with Statutory Authorities including
Income Tax,RBI,EoU, STPI, Custom Bonding, Central Excise etc.
 Accounting & Payroll Services
 Tax and Regulatory Services
 Advising on Customs & Excise matters
 Immigration Services

31. Intellectual Property Services
 IP Portfolio Management
 IP Auditing
 IP Strategic Alliances
 Collaboration
 Licensing
 Technology Transfer Agreements
 Search, drafting, filing and prosecution in :
 Patents
 Trademarks
 Copyrights
 Industrial Designs

32. Our Commitment
Value
 One stop legal boutique where assignments carried out at a fraction of
the cost of clients staff
 Reduce client staff management time and overhead costs, and increase
clients profitability
 Enable clients staff to concentrate on more interesting and value-added
work
Service
 Robust management and procedures to ensure delivery on time and on
budget
 Dedicated one-to-one communication with client, to ensure every
project is right first time
 Full service delivery is achieved by synergies of subject matter
expertise of our in-house Lawyers, Chartered Accountants, Company
Secretaries and Tax Consultants
Quality
 Two-level file review and signoff by expert Lawyers, even for the
smallest assignment

33. Our Core Strengths
 Dedicated team of legal professionals with strong deal exposure and
knowledge of regulations of various sectors.
 Proactive and structured approach
 Well defined processes
 Well defined Project methodology tailored to suit the needs of clients for
service delivery
 Talented team with experience of working with some of the largest
companies in India exposure to leading cross border transactions in India
 Experience & proven capabilities to handle Diversified Multi-national Clients
i.e. Information Technology, Energy, Manufacturing, Consultancy, Oil & Gas
Sector, Retail Trading, Hospitality, Restaurant and related sectors.
 Competitive advantage of costing by virtue of expertise and experienced
resources.

34. For further information
Contact :
Aashish Srivastava
Partner
Equi Corp Associates
Advocates & Solicitors
W-86, Classic House, GK-II, New Delhi
T: +91 11 40573261
Mobile : +919958709189
E-mail :admin@equicorplegal.com