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The Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999 was enacted in order to provide the procedures connected to matters of collective investment schemes.

Brief History of the Regulations

The Securities and Exchange Board of India (SEBI) has issued the SEBI (Collective Investment Schemes) Regulations, 1999 by the powers under Section 30 read with Sections 11 and 19 of the SEBI Act, 1992 on 15th October, 1999.

List of Amendments

SEBI (Collective Investment Schemes) (Amendment) Regulations, 2000
SEBI (Appeal to the Securities Appellate Tribunal) (Amendment) Regulations, 2000
SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002
SEBI (Collective Investment Schemes) (Amendment) Regulations, 2002
SEBI (Criteria for Fit and Proper Person) Regulations, 2004
SEBI (Intermediaries) Regulations, 2008
SEBI (Collective Investment Schemes) (Amendment) Regulations, 2014
SEBI (Payment of Fees and Mode of Payment) (Amendment) Regulations, 2017

Download
Securities and Exchange Board of India (Collective Investment Schemes) Reguations, 1999

Table of Contents

1. Important Definitions

Advertisement includes-

Notices, brochures, pamphlets, circulars, showcards, catalogues, hoardings, placards, posters, insertions in newspapers, pictures, films and cover pages of offer documents.
Any other matter to which publicity is given through print medium, radio, television programmes or electronic media.

Appraising Agency means an agency empanelled with the Board for the purpose of conducting technical or financial appraisal of the collective investment scheme.

Associate in relation to a collective investment management company or trustee, includes a person who, directly or indirectly, by himself, or in combination with other persons, exercises control over the Collective Investment Management Company or the trustee, as the case may be, or in respect of whom the Collective Investment Management Company or the trustee, as the case may be directly or indirectly, by itself, or in combination with other persons, exercises control, or whose director, officer or employee is a director, officer or employee of the Collective Investment Management Company or the trustee, as the case may be.

Collective Investment Management Company means a company incorporated under the Companies Act, 2013 and registered with the Board under these regulations, whose object is to organise, operate and manage a collective investment scheme.

Collective Investment Scheme Property includes subscription of moneys or money’s worth (including bank deposits) to the collective investment scheme and includes property acquired, directly or indirectly, with, or with the proceeds of, subscription of money referred to above or income arising, directly or indirectly, from subscription money or property referred to above.

Close Ended Collective Investment Scheme means any collective investment scheme launched by a Collective Investment Management Company, in which the period of maturity of the collective investment scheme is specified and there is no provision for re-purchase before the expiry of the maturity of the collective investment scheme.

Control or Controlling Interest means control exercised or controlling interest held in case of a company, by any person or combination of persons who directly or indirectly own, control or hold shares carrying not less than 10% of the voting rights of such company or as between two companies, if the same person or combination of persons, directly or indirectly, own, control or hold shares carrying not less than 10% of the voting rights of each of the two companies or majority of the directors of any company who are in a position to exercise control over the Collective Investment Management Company.

Economic Offence means an offence to which the Economic Offences (Limitation of Prosecutions) Act, 1974 applies.

Fraud has the same meaning as assigned to it under the Indian Contract Act, 1872.

Key Personnel in relation to a company, means the persons who exercises effective control over its affairs.

Net Worth means the aggregate value of the paid-up equity capital and free reserves (excluding funds created out of revaluation), reduced by the aggregate value of accumulated losses and deferred expenditure not written off, including miscellaneous expenses not written off.

Offer Document means any document by which applications for subscribing to units of the collective investment scheme are invited from the public.

Trustee means a person who holds the property of the collective investment scheme in trust for the benefit of the unit holders, in accordance with these regulations.

Unit includes any instrument issued under a collective investment scheme, by whatever name called, denoting the value of the subscription of a unit holder.

Unit Holder means a person holding a unit in a collective investment scheme.

2. Registration of Collective Investment Management Company

2.1 General Procedure

No person other than a Collective Investment Management Company can launch a collective investment scheme.
No person other than a Collective Investment Management Company which has obtained a certificate under these regulations can carry on or sponsor or launch a collective investment scheme.
Any person proposing to carry any activity as a Collective Investment Management Company on or after the commencement of these regulations can make an application to the Board for the grant of registration in Form A as specified in these regulations.
Any person proposing to carry on or sponsor or launch any scheme or arrangement which would be deemed to be a collective investment scheme, has to make an application for grant of registration as a Collective Investment Management Company in Form A as given under these regulations. Any scheme or arrangement which is otherwise regulated or prohibited under any other law cannot be deemed to be a collective investment scheme.
All other provisions of these regulations and the guidelines and circulars issued, apply to any scheme or arrangement deemed to be a collective investment scheme.
Any person who immediately, prior to the commencement of these regulations was operating a collective investment scheme, is subject to the provisions of Chapter IX of these regulations to make an application to the Board for the grant of a certificate within a period of 2 months from such date. An application as specified here has to contain such particulars as are specified in Form A and has to be treated as an application made in pursuance of Regulation 4.
Every application for registration has to be accompanied by a non-refundable application fee as specified in the Second Schedule.
An application, which is not complete in all respects or does not conform to the requirements under these regulations can be rejected by the Board.
The Board may direct the applicant to furnish such further information or clarification as may be required by it, for the purpose of processing the application.
The Board, if it so desires, may ask the applicant or its authorized representative to appear before the Board for personal representation in connection with the grant of a certificate.
The Board may, on receipt of an application and on being satisfied that the applicant complies with the requirements, call upon the applicant to pay registration fee as specified in the Second Schedule.
On receipt of registration fee, the Board has to grant a certificate in Form B, on such terms and conditions as are in the interest of investors and as maybe specified by the Board.
If an application for grant of registration does not satisfy the conditions specified, the Board may reject the application after giving the applicant a reasonable opportunity of being heard and inform the applicant of the same. The decision has to be communicated to the applicant by the Board within 30 days of such decision stating therein the grounds on which the application has been rejected.

2.2 Conditions for Eligibility of Registration

The applicant is set up and registered as a company under the Companies Act, 2013.
The applicant has, in its memorandum of association, specified the managing of the collective investment scheme as one of its main objects.
The applicant has a net worth of not less than INR 5 crores. (Provided that at the time of making the application the applicant has to have a minimum net worth of INR 3 crores which has to be increased to INR 5 crores within 3 years from the date of grant of registration.
The applicant is a fit and proper person for the grant of such certificate.
The applicant has adequate infrastructure to enable it to operate a collective investment scheme in accordance with the provision of these regulations.
The directors or key personnel of the applicant has to consist of persons of honesty and integrity having adequate professional experience in related fields 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% of the directors of such Collective Investment Management Company has to consist of persons who are independent and are not directly or indirectly associated with the persons who have control over the Collective Investment Management Company.
No person, directly or indirectly connected with the applicant has in the past been refused registration by the Board under the Act. The Board has to take into account whether the previous application for a certificate of any person, directly or indirectly, connected with the applicant has been rejected by the Board or any disciplinary action has been taken against such person under the Act or any of the rules or any of the regulations made under the Act.
At least one of the directors, on the Board of the Collective Investment Management Company, who is not subject to retirement,is a representative of the trustee.
The Collective Investment Management Company is not a trustee of any collective investment scheme.
In case the applicant is an existing collective investment scheme, it has complied with the provisions of Chapter IX of these regulations.

2.3 Terms and Conditions for Certificate of Registration

Any director of the Collective Investment Management Company cannot be a director in any other Collective Investment Management Company unless such person is an independent director and approval of the Board of Collective Investment Management Companies of which such person is an independent director, has been obtained.
The Collective Investment Management Company has to forthwith inform the Board of any material change in the information or particulars previously furnished, which have a bearing on the certificate granted by it.
Appointment of a director of a Collective Investment Management Company has to be made with the prior approval of the trustee.
The Collective Investment Management Company has to comply with provisions of the Act and these regulations.
No change in the controlling interest of the Collective Investment Management Company has to be made without obtaining prior approval of the Board, the trustee and the unit holders holding at least one-half of the nominal value of the unit capital of the collective investment scheme.
The Collective Investment Management Company has to take adequate steps to redress the grievances of the investors within 1 month from the date of receipt of the complaint from the aggrieved investor.
The Collective Investment Management Company has to enter into an agreement with a depository for dematerialization of the units of collective investment scheme proposed to be issued.
All monies payable towards subscription of units of collective investment scheme has to be paid through cheque or demand draft or through any other banking channel, but not by cash.
The Collective Investment Management Company has to comply with KYC (know your client) norms as specified by the Board.

3. Restriction on Business Activities

A Collective Investment Management Company cannot-

undertake any activity other than that of managing the collective investment scheme
act as a trustee of any collective investment scheme
launch any collective investment scheme for the purpose of investing in securities
invest in any collective investment scheme floated by it.

4. Obligations of Collective Investment Management Company

A Collective Investment Management Company has to be responsible for managing the funds or properties of the collective investment scheme on behalf of the unit holders.
A Collective Investment Management Company has to take all reasonable steps and exercise due diligence to ensure that the collective investment scheme is managed in accordance with the provisions of these regulations, offer document and the trust deed.
A Collective Investment Management Company has to exercise due diligence and care in managing assets and funds of the collective investment scheme.
A Collective Investment Management Company has to be responsible for the acts of commissions and omissions by its employees or the persons whose services have been availed by it.
A Collective Investment Management Company has to remain liable to the unit holders for its acts of commission or omissions, irrespective of anything contained in any contract or agreement.
A Collective Investment Management Company has to be incompetent to enter into any transaction with or through its associates, or their relatives relating to the collective investment scheme (Provided that in case the Collective Investment Management Company enters into any transactions relating to the collective investment scheme with any of its associates, a report to that effect has to immediately be sent to the trustee and to the Board.
A Collective Investment Management Company has to appoint registrar and share transfer agents.
A Collective Investment Management Company has to abide by the Code of Conduct as specified in the Third Schedule.
A Collective Investment Management Company has to give receipts for all monies received by it and give a report to the Board every month, particularly of receipts and payments.
A Collective Investment Management Company has to hold a meeting of the Board of Directors to consider the affairs of the collective investment scheme at least twice in every 3 months.
A Collective Investment Management Company has to ensure that its officers or employees do not make improper use of their position or information to gain, directly or indirectly, an advantage for themselves or for any other person or to cause detriment to the collective investment scheme.
A Collective Investment Management Company has to obtain adequate insurance against the property of the collective investment scheme.
A Collective Investment Management Company has to comply with such guidelines, directives, circulars and instructions as may be issued by the Board from time to time, on the subject of collective investment schemes.

5. Submission of Information and Documents

The Collective Investment Management Company has to prepare quarterly reports as at the end of March, June, September and December on its activities and the position regarding compliance with these regulations and submit the same to the trustees within one month of the expiry of each quarter.
The Collective Investment Management Company has to file with the trustee and the Board, particulars of all its directors along with their interest in other companies within 15 days of their appointment and any change in the interests of directors, within 15 days of such change.
The Collective Investment Management Company has to furnish a copy of the balance sheet, profit and loss account and a copy of the summary of the yearly appraisal report to the unit holders within 2 months from the closure of the financial year.
The Collective Investment Management Company has to furnish to the Board and the trustee such information and documents to the Board and the trustee as may be required by them concerning the affairs of the collective investment scheme.

6. Trustees and their Obligations

6.1 General Procedure

A collective investment scheme has to be constituted in the form of a trust and the instrument of trust has to be in the form of a deed duly registered under the provisions of the Indian Registration Act, 1908 executed by the Collective Investment Management Company in favour of the trustees named in such an instrument.
A Collective Investment Management Company has to appoint a trustee who has to hold the assets of the collective investment scheme for the benefit of unit holders.
The trust deed has to contain such clauses as are specified in the Fourth Schedule and such other clauses as are necessary for safeguarding the interests of the unit holders.
No trust deed can contain a clause which has the effect of limiting or extinguishing the obligations and liabilities of the Collective Investment Management Company in relation to any collective investment scheme or the unit holders or indemnifying the trustee or the Collective Investment Management Company for loss or damage caused to the unit holders by their acts of negligence or acts of commissions or omissions.
Only persons registered with the Board as Debenture Trustee under SEBI (Debenture Trustee) Regulations, 1993 is eligible to be appointed as trustees of collective investment scheme (Provided that no person is eligible to be appointed as trustee, if he is directly or indirectly associated with the persons who have control over the collective investment management company).
The Collective Investment Management Company has to furnish to the Board particulars as specified in Form C in respect of trustees appointed.
No person can be appointed as trustee of a collective investment scheme if he has been found guilty of an offence under securities laws or the Board or any authority to which the Board has delegated its power has passed against such person, an order under the Act for violation of any provision of the Act or of regulations made.
The trustee and the Collective Investment Management Company have to enter into an agreement for managing the collective investment scheme property.
The agreement for managing the collective investment scheme property has to contain such clauses as are specified in the Fifth Schedule and such other clauses as are necessary for the purpose of fulfilling the objectives of the collective investment scheme.

6.2 Rights and Obligations of Trustees

The trustees have a right to obtain from the Collective Investment Management Company such information as is considered necessary by the trustee and to inspect the books of account and other records relating to the collective investment scheme.
The trustees have to ensure that the Collective Investment Management Company has the necessary office infrastructure, appointed all key personnel including managers for the collective investment scheme and submitted their biographical data which has to contain the educational qualifications and past experience in the areas relevant for fulfilling the objectives of the collective investment scheme, appointed auditors to audit the accounts of the collective investment scheme from the list of auditors approved by the Board, appointed a compliance officer to comply with the provisions of the Act and these regulations and to redress investor grievances, appointed registrars to an issue and share transfer agent, prepared a compliance manual and designed internal control mechanisms including internal audit systems, taken adequate insurance for the assets of the collective investment scheme, not given any undue or unfair advantage to any associates of the company or dealt with any of the associates in any manner detrimental to the interest of the unit holders, operated the collective investment scheme in accordance with the provisions of the trust deed, these regulations and the offer document of the collective investment scheme, undertaken the activity of managing collective investment schemes only, taken adequate steps to ensure that the interest of investors of one collective investment scheme are not compromised with the object of promoting the interest of investors of any other collective investment scheme, minimum net worth on a continuous basis and has to inform the Board immediately of any shortfall and been diligent in empanelling the marketing agents and in monitoring their activities.
Where the trustee has reason to believe that the conduct of business of the collective investment scheme is not in accordance with these regulations, trust deed and the offer document of the collective investment scheme, the trustee has to forthwith take such remedial steps as are necessary and has to immediately inform the Board of the action taken.
The trustee has to be accountable for, and be the custodian of, the funds and property of the respective collective investment schemes and has to hold the same in trust for the benefit of the unit holders in accordance with these regulations and the provisions of trust deed.
The trustee has to be responsible for the calculation of any income due to be paid to the collective investment scheme and also for any income received in the collective investment scheme to the unit holders.
The trustee has to convene a meeting of the unit holders whenever required to do so by the Board in the interest of the unit holders, whenever required to do so on the requisition made by unit holders holding at least one-tenth of nominal value of the unit capital of any collective investment scheme or when any change in the fundamental attributes of any collective investment scheme (Provided that no such change can be carried out unless the consent of the unit holders holding at least three-fourths of nominal value of the unit capital of the collective investment scheme is obtained.
The trustee has to review on a quarterly basis, every year, all activities carried out by the Collective Investment Management Company, periodically all service contracts relating to registrars to an issue and share transfer agents and satisfy itself that such contracts are fair and reasonable in the interest of the unit holders and investor complaints received and the redressal of the same by the Collective Investment Management Company.
The trustee has to ensure that net worth of Collective Investment Management Company is not deployed in a manner which is detrimental to interest of the unit holders, property of each collective investment scheme is clearly identifiable as collective investment scheme property and held separately from property of the collective investment scheme and property of any other collective investment scheme and clearances or no objection certificate is obtained, in respect of transactions relating to property of the collective investment scheme from such authority as is competent to grant such clearance or no objection certificate.
The trustee has to abide by the Code of Conduct as specified in the Third Schedule.
The trustee has to furnish to the Board on a quarterly basis, every year, a report on the activities of the collective investment scheme, a certificate stating that the trustee has satisfied himself that affairs of the Collective Investment Management Company and of the various collective investment schemes are conducted in accordance with these regulations and investment objective of each collective investment scheme.
The trustee has to cause the profit and loss accounts and balance sheet of the collective investment schemes to be audited at the end of each financial year by an auditor empanelled with the Board, each collective investment scheme to be appraised at the end of each financial year by an appraising agency and a collective investment scheme rated by a credit rating agency.
A meeting of the trustees to discuss the affairs of the collective investment scheme has to be held at least twice in every 3 months in a financial year.
The trustee has to report to the Board any breach of these regulations and has had, or is likely to have, a materially adverse effect on the interests of unitholders as soon as they become aware of the breach.
The trustee has to ensure that the fees and expenses of the collective investment scheme are within the limits as specified in Part I of the Ninth Schedule, accounts of the collective investment schemes are drawn up in accordance with the accounting norms as specified in Part II of the Ninth Schedule and accounts of the collective investment scheme comply with the format of the balance sheet and the profit and loss account as specified in Part III of theNinth Schedule.

6.3 Termination of Trusteeship

The trusteeship of a trustee has to come to an end if the trustee ceases to be trustee under the SEBI (Debenture Trustees) Regulations, 1993 or if the trustee is in the course of being wound up or if unit holders holding at least three-fourths of the nominal value of the unit capital of the collective investment scheme pass a resolution for removing the trustee and the Board approves such resolution or if in the interest of the unit holders, the Board, for reasons to be recorded in writing decides to remove the trustee for any violation of the Act or these regulations committed by them or if the trustee serves on the Collective Investment Management Company a notice of not less than 3 months expressing its intention not to continue as trustee.
On termination of the trusteeship, another trustee eligible to be appointed has to be appointed by the Collective Investment Management Company.
The appointment of the new trustee has to be completed within 3 months from the date the previous trusteeship came to an end.
The Board may notwithstanding anything contained in these regulations, any person as a trustee if the Collective Investment Management Company fails to appoint a trustee.
The trustee appointed has to stand substituted as a trustee in all the documents to which the trustee so removed was a party.
The person appointed by the Board has to apply to the Court for an order directing the Collective Investment Management Company to wind up the collective investment scheme.
A trust deed in the form as specified has to be executed by the Collective Investment Management Company in favour of the trustee so appointed and from the date of such appointment, trustee has to be subject to all the rights and duties as specified in the regulations.
The trustee so removed has to, from such date be discharged from complying with the obligations under the trust deed but remains liable for any action taken by them before such removal.

6.4 Termination of the Agreement with the Collective Investment Management Company

The agreement referred to in Regulation 20, entered into by the trustee with the Collective Investment Management Company may be terminated if the Collective Investment Management Company is in the course of being wound up as per the provisions of the Companies Act, 2013, if unit holders holding at least three-fourths of the nominal value of the unit capital of the collective investment scheme pass a resolution for terminating the agreement with the Collective Investment Management Company and the prior approval of the Board has been obtained or if in the interest of the unit holders, the Board or the trustee, after obtaining prior approval of the Board, and after giving an opportunity of being heard to the Collective Investment Management Company, decide to terminate the agreement with the Collective Investment Management Company.
Upon termination of agreement, another Collective Investment Management Company, registered with the Board, can be appointed by the trustee within 3 months from the date of such termination.
The Collective Investment Management Company so removed has to continue to act as such at the discretion of the trustee or the trustee itself may act as a Collective Investment Management Company till such time as a new Collective Investment Management Company is appointed.
The new Collective Investment Management Company appointed stands substituted as a party in all the documents to which the Collective Investment Management Company so removed was a party.
The Collective Investment Management Company so removed has to continue to be liable for all acts of omission and commissions irrespective of such termination.
If, none of the Collective Investment Management Companies, registered under these regulations consent to be appointed as Collective Investment Management Company within a further period of 3 months, then the trustee may wind up the collective investment scheme.
An agreement for managing collective investment scheme property shall be executed in favour of the new Collective Investment Management Company subject to all the rights and duties as specified in the regulations.

7. Other Procedures of Collective Investment Schemes of Collective Management Companies

No collective investment scheme can be launched by the Collective Investment Management Company unless such collective investment scheme is approved by the trustee.
No collective investment scheme can be launched by the Collective Investment Management Company without obtaining rating from a credit rating agency.
No collective investment scheme can be launched by the Collective Investment Management Company without getting the collective investment scheme appraised by an appraising agency.
A Collective Investment Management Company has to launch only close ended collective investment schemes where the duration of the collective investment schemes cannot be less than 3 calendar years.
A Collective Investment Management Company has to obtain adequate insurance policy for protection of the collective investment scheme property.
No collective investment scheme can provide guaranteed or assured returns (Provided that indicative return may be indicated in the offer document only, if the same is assessed by the appraising agency and expressed in monetary terms).
The Collective Investment Management Company has to, before launching any collective investment scheme, file a copy of the offer document of the collective investment scheme with the Board and pay filing fees as specified in the Second Schedule. The offer document has to contain such information as specified in the Sixth Schedule. The offer document has to also contain a true and fair view of the collective investment scheme and adequate disclosures to enable the investors to make informed decisions.
The Board may in the interest of investors require the Collective Investment Management Company to carry out such modifications in the offer document as it deems fit.
In case no modifications are suggested by the Board in the offer document within 21 days from the date of filing, the Collective Investment Management Company may issue the offer document to the public.
Advertisements in respect of every collective investment scheme have to be in conformity with the Advertisement Code as specified in the Seventh Schedule.
The advertisement for each collective investment scheme has to disclose in addition to the investment objectives, the method and periodicity of valuation of collective investment scheme property.
The appraising agency whose appraisal report forms part of the offer document and has given a written consent for the inclusion of the appraisal report in the offer document is liable for any statement in the appraisal report which is misleading, incorrect or false.
The offer document and advertising materials cannot be misleading or contain any statement or opinion which are incorrect or false.
Where an offer document or advertisement includes any statement or opinion which are incorrect or false or misleading, every person who is a director of the Collective Investment Management Company at the time of the issue of the offer document or who has issued the offer document, is punishable under the Act unless he proves either that the statement or opinion was immaterial or that he had reasonable ground to believe at the time of the issue of the offer document or advertisement that the statement was true.
No collective investment scheme can be open for subscription for more than 90 days.
The Collective Investment Management Company has to specify in the offer document, the minimum and the maximum subscription amount it seeks to raise under the collective investment scheme and in case of oversubscription the process of allotment of the amount oversubscribed.
The Collective Investment Management Company has to refund the application money to the applicants, if the collective investment scheme fails to receive the minimum subscription amount. Any amount refundable has to be refunded within a period of 6 weeks from the date of closure of subscription list.
In the event of failure to refund the amounts within the period specified, the Collective Investment Management Company has to pay interest to the applicants at a rate of 15% per annum on the expiry of 6 weeks from the date of closure of the subscription list.
The Collective Investment Management Company has to issue to the applicant whose application has been accepted, unit certificates as soon as possible but not later than 6 weeks from the date of closure of the subscription list (Provided that if the units are issued through a depository, a receipt in lieu of unit certificate will be issued as per provisions of SEBI (Depositories and Participants) Regulations, 1996 and the bye laws of the depository).
A unit certificate issued under the collective investment scheme is freely transferable.
The Collective Investment Management Company has to, on production of instrument of transfer together with relevant unit certificates, register the transfer and return the unit certificate to the transferee within 30 days from the date of such production.
The subscription amount received, has to be kept in a separate bank account in the name of the collective investment scheme and has to be utilised for adjustment against allotment of units only after the trustee has received a statement from the registrars to the issue and share transfer agent regarding minimum subscription amount, as stated in the offer document, having been received from the public or for refund of money in case minimum subscription amount, as stated in the offer document, has not been received or in case of oversubscription.
The minimum subscription amount as specified in the offer document cannot be less than the minimum amount, as specified by the appraising agency, needed for completion of the project for which the collective investment scheme is being launched.
The money credited to the account of the collective investment scheme has to be utilised for the purposes of the collective investment scheme and as specified in the offer document.
Any unutilised amount lying in the account of the collective investment scheme has to be invested in the manner as disclosed in the offer document.
The Collective Investment Management Company cannot invest the funds of the collective investment scheme for purposes other than the objective of the collective investment scheme as disclosed in the offer document, segregate the collective investment scheme assets of different collective investment schemes, not invest corpus of a collective investment scheme in other collective investment schemes and not transfer funds from one collective investment scheme to another collective investment scheme (Provided that inter-scheme transfer of collective investment scheme property may be permitted at the time of termination of the collective investment scheme with prior approval of the trustee and the Board.
The units of every collective investment scheme has to be listed immediately after the date of allotment of units and not later than 6 weeks from the date of closure of the collective investment scheme on each of the stock exchanges as mentioned in the offer document.
A collective investment scheme has to be wound up on the expiry of duration specified in the collective investment scheme or on the accomplishment of the purpose of the collective investment scheme or on the happening of any event which, in the opinion of the trustee, requires the collective investment scheme to be wound up and the prior approval of the Board is obtained or if unit holders of a collective investment scheme holding at least three-fourth of the nominal value of the unit capital of the collective investment scheme pass a resolution that the collective investment scheme be wound up and the approval of the Board is obtained or if in the opinion of the Board, the continuance of the collective investment scheme is prejudicial to the interests of the unit holders or if in the opinion of the Collective Investment Management Company, the purpose of the collective investment scheme cannot be accomplished and it obtains the approval of the trustees and also of the unit holders of the collective investment scheme holding at least three-fourth of the nominal value of the unit capital of the collective investment scheme with a resolution that the collective investment scheme be wound up and the approval of the Board is obtained.
Where a collective investment scheme is to be wound up, the trustee has to give notice disclosing the circumstances leading to the winding up of the collective investment scheme in a daily newspaper having nationwide circulation and in the newspaper published in the language of the region where the Collective Investment Management Company is registered.
The trustee has to dispose of the assets of the collective investment scheme concerned in the best interest of the unit holders of that collective investment scheme. The proceeds of sale realised has to be first utilized towards the discharge of such liabilities as are due and payable under the collective investment scheme and after making appropriate provision for meeting the expenses connected with such winding up, the balance has to be paid to the unit holders in proportion to their unit holding.
On the completion of the winding up, the trustee has to forward to the Board and the unit holders a report on the steps taken for realisation of assets of the collective investment scheme, expenses for winding up and net assets available for distribution to the unit holders, a certificate from the auditors of the collective investment scheme to the effect that all the assets of the collective investment scheme are realised and the details of the distribution of the proceeds.
The unclaimed money if any at the time of winding up has to be kept separately in a bank account by the trustee for a period of 3 years for the purpose of meeting investors’ claims and thereafter have to be transferred to the investor protection fund, as may be specified by the Board.
On and from the date of the publication of notice, the trustee or the Collective Investment Management Company as the case may be, has to cease to carry on any business activities in respect of the collective investment scheme so wound up.
If, after the receipt of the report, the Board is satisfied that all the measures for winding up of the collective investment scheme have been complied with, the collective investment scheme has to cease to exist.

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