Collective investment scheme
Section 11AA of the Securities and Exchange Board of India Act, 1992 deals with collective investment scheme. Any scheme or arrangement which satisfies the conditions referred to in sub-section (2) [or sub-section (2A)] shall be a collective investment scheme: [Provided that any pooling of funds under any scheme or arrangement, which is not registered with the Board or is not covered under sub-section (3), The Act came into force on 30 Jan 1992.
1[11AA. Collective investment scheme.-- (1) Any scheme or arrangement which satisfies the conditions referred to in sub-section (2) 2[or sub-section (2A)] shall be a collective investment scheme:
2[Provided that any pooling of funds under any scheme or arrangement, which is not registered with the Board or is not covered under sub-section (3), involving a corpus amount of one hundred crore rupees or more shall be deemed to be a collective investment scheme.]
(2) Any scheme or arrangement made or offered by any 3[person] under which,--
(i) the contributions, or payments made by the investors, by whatever name called, are pooled and utilized for the purposes of the scheme or arrangement;
(ii) the contributions or payments are made to such scheme or arrangement by the investors with a view to receive profits, income, produce or property, whether movable or immovable, from such scheme or arrangement;
(iii) the property, contribution or investment forming part of scheme or arrangement, whether identifiable or not, is managed on behalf of the investors;
(iv) the investors do not have day-to-day control over the management and operation of the scheme or arrangement.
2[(2A) Any scheme or arrangement made or offered by any person satisfying the conditions as may be specified in accordance with the regulations made under this Act.]
(3) Notwithstanding anything contained in sub-section (2) 2[or sub-section (2A)], any scheme or arrangement--
(i) made or offered by a cooperative society registered under the Co-operative Societies Act, 1912 (2 of 1912) or a society being a society registered or deemed to be registered under any law relating to co-operative societies for the time being in force in any State;
(ii) under which deposits are accepted by non-banking financial companies as defined in clause (f) of section 45-I of the Reserve Bank of India Act, 1934 (2 of 1934);
(iii) being a contract of insurance to which the Insurance Act, 1938 (4 of 1938), applies;
(iv) providing for any scheme, pension scheme or the insurance scheme framed under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952);
(v) under which deposits are accepted under section 58A of the Companies Act, 1956 (1 of 1956);
(vi) 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 (1 of 1956);
(vii) falling within the meaning of chit business as defined in clause (e) of section 2 of the Chit Funds Act, 1982 (40 of 1982);
(viii) under which contributions made are in the nature of subscription to a mutual fund;
4[(ix) such other scheme or arrangement which the Central Government may, in consultation with the Board, notify,]
shall not be a collective investment scheme.]
Section 11AA, The Securities and Exchange Board of India Act, 1992 (Act 15 of 1992).
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
This section refers to
Referred to by 2
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Quantum Global Securities and Leasing Company LTD vs Securities and Exchange Board of India
Court's Decision & Legal Precedent
The conditions stipulated in clauses (a), (b) and (c) of Section 15J of the SEBI Act are illustrative in nature and not exhaustive. The Adjudicating Officer has discretion to consider other circumstances beyond those enumerated in Section 15J while determining the quantum of penalty under Sections 15A to 15HA. The power and discretion vested by Section 15J is not eclipsed by the penalty provisions in Sections 15A to 15HA, and the Explanation to Section 15J added by Act No. 7 of 2017 clarifies that the Adjudicating Officer shall have deemed to have always exercised this discretion in determining penalties. These provisions must be read harmoniously to avoid conflict and inconsistency.
On this section: Authority to examine collective investment schemes for violations
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Magnum Equity Broking LTD vs Securities and Exchange Board of India
Court's Decision & Legal Precedent
The conditions stipulated in clauses (a), (b), and (c) of Section 15J of the SEBI Act, 1992 are illustrative in nature and not exhaustive. The Adjudicating Officer has discretion to consider circumstances beyond those enumerated in Section 15J while determining penalty quantum under Sections 15A to 15HA. Section 15J was never eclipsed by amendments to Sections 15A-15HA, and the Explanation added by Act No. 7 of 2017 clarified this legislative intent. The power to impose "such penalty as he thinks fit" under Section 15I(2) supports this discretionary approach. However, the imposition of penalty itself depends on satisfaction of substantive provisions in Sections 15A-15HA, not on satisfaction of Section 15J conditions.
On this section: SEBI's power to examine collective investment schemes; cited in context of investigation into CIS regulations violations.
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Securities & Time Share Owners Welfare Association v. SEBI
Court's Decision & Legal Precedent
Judgment pronounced 30.11.2022 (order-20.pdf; matches decision date): DB held whether a timeshare scheme is a CIS turns on case-by-case satisfaction of s.11AA(2) pooling/contribution tests; no blanket mandamus to treat all timeshare companies as CIS under s.11AA — SEBI acts where facts meet the statutory criteria; PIL dismissed.
On this section: s.11AA CIS definition is fact-specific under sub-s.(2); timeshare is not automatically CIS without meeting pooling/utilisation conditions.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Made under this section, and citing it
1 instrument names this provision in its title or its text without being made under it.
Questions about Section 11AA
What have the courts held on Section 11AA of the Securities and Exchange Board of India Act?
Quantum Global Securities and Leasing Company LTD vs Securities and Exchange Board of India (28 Feb 2019) is the leading judgment on this section among those set out below: Authority to examine collective investment schemes for violations. Another 2 judgments on this section are set out below, 2 of them from the Supreme Court. They run from 2019 to 2022.
How do I find court cases under Section 11AA of the Securities and Exchange Board of India Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Sebi Act 11AA, section 11AA Sebi Act, section 11AA of the Securities and Exchange Board of India Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 3 reported judgments on this section are set out on this page, beginning with Quantum Global Securities and Leasing Company LTD vs Securities and Exchange Board of India (28 Feb 2019).
What should I read with Section 11AA of the Securities and Exchange Board of India Act, and has it changed?
Its own text turns on Chit Funds Act 2 (Definitions), so none of them can safely be read on its own. 2 other provisions in this corpus refer back to it. One instrument names it without being made under it, most recently the Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999. Last amended on March 06, 2017 (2017).
When did Section 11AA of the Securities and Exchange Board of India Act come into force?
Section 11AA of the Securities and Exchange Board of India Act, cited as Sebi Act 11AA, came into force on 30 Jan 1992, having been enacted on 04 Apr 1992. It is in force as at the date shown on this page.
Other sections of this Act
- 11. Functions of Board1315 words
- 11C. Investigation1145 words
- 12. Registration of stock-brokers, sub-brokers, share transfer agents, etc678 words
- 28A. Recovery of amounts629 words
- 15U. Procedure and powers of the Securities Appellate Tribunal494 words
- 15D. Penalty for certain defaults in case of mutual funds464 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Text as in force on 15 Oct 2026. This page is not a substitute for legal advice.