Securities Appellate Tribunal has held that the fact that Section 11AA(2) of the SEBI Act, 1992 refers to any scheme or arrangement made or offered by any ‘company’ would not mean that the jurisdiction of SEBI to regulate Collective Investment Scheme (CIS) is restricted to any scheme or arrangement made or offered by any company registered under the Companies Act, 1956 only. The Tribunal in this regard on 13-10-2015 observed that Section 11AA(2) merely sets out the conditions applicable to any scheme or arrangement offered by an entity to which SEBI, under CIS Regulations would grant registration for running a CIS. Reliance in this regard was also placed on provisions of Section 11(1) and Section 11(2)(c) of SEBI Act, which states that SEBI is duty bound to protect the interests of all investors in ‘securities’ by regulating the securities market including the investors in the collective investment schemes.
While holding that the Art Fund sponsored by the appellant as AMC of the Trust constitutes CIS under Section 11AA of SEBI Act 1992, the Tribunal was of the view that expression ‘Collective Investment Scheme’ defined under Section 11AA(1) is wide enough to cover any scheme or arrangement. Provisions of Section 11AA(3) carving out some exceptions were also taken note of by the Tribunal in this regard. Finally, since the appellant (Osian’s-Connoisseurs of Art Private Limited ) was running CIS through the arrangement of a private trust without obtaining registration from SEBI, the SAT upheld the decision of the full-time Member of SEBI finding the appellant guilty of operating CIS in violation of the SEBI Act and the CIS Regulations.