sebi:WTM/PS/03/IMD-CIS/APR/2015
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Facts / Headnote
Held that Arohan sponsored an unregistered Collective Investment Scheme in violation of Section 12(1B) and Regulation 3; directed to abstain from CIS, refund entire monies with 10% p.a. interest within three months, submit winding-up and repayment report and asset inventory, and restrained from securities market for four years with further action on default.
Provisions invoked
- s. 11A
- s. 11
- s. 19
- s. 12
- s. 11(2)
- s. 58A
Regulations
- Reg. 65
- Reg. 3
- Reg. 199
- Reg. 2(h)
Parties
- Arohan Trustee Company Private Limited
Holding
Arohan Trustee Company Private Limited sponsored the India Art Fund which was held to be an unregistered Collective Investment Scheme in contravention of Section 12(1B) read with Sections 11 and 11AA of the SEBI Act and Regulation 3 of the CIS Regulations, and was directed to refund collected monies with 10% interest and restrained from accessing the securities market for four years.
Full text
Page 2 of 15 Investment Schemes) Regulations, 1999 (hereinafter referred to as 'CIS Regulations'). Subsequently, SEBI issued a show cause notice (hereinafter referred to as 'SCN') dated April 17, 2008 to Arohan advising it to show cause as to why it should not register with SEBI as a Collective Investment Management Company. The SCN further stated that in case of failure to do so, why appropriate directions under Sections 11 and 11B of the SEBI Act should not be issued against it for the alleged violations of the provisions of Section 12(1B) read with Regulation 3 of the CIS Regulations.
Page 3 of 15 c. The 'art funds' were not contemplated as being covered by the scope of the SEBI Act and the CIS Regulations. The legislative intent of the CIS Regulations was the promotion of schemes by the plantation companies, which collected money for growing trees and forests and commercial exploitation of teak. d. IAF did not entail any unit capital at all. The interests of any contributory in IAF were not being transferred freely to any party.
Page 4 of 15 24, 2013, submitted that they were still working on the details as asked and requested for more time. Vide email dated December 07, 2013, Mr. Prakash Apte submitted certain additional details. The details so filed were also found incomplete and an intimation regarding this was given to Mr. Apte on December 11, 2013. As the details were not forthcoming from Arohan, a reminder letter was issued to Arohan on January 02, 2014, asking for the certified Winding up and Repayment Report and the following information regarding the schemes of 'India Art Funds':
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Source: SecMarx — sebi:WTM/PS/03/IMD-CIS/APR/2015. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.