Regulating The Unregulated: SEBI Interprets What Qualifies As A Collective Investment Scheme

Background

For the last few years, Securities and Exchange Board of India ("SEBI"), the Indian securities regulator, has intensified its scrutiny of investment structures that raise domestic capital on an unregulated basis. Securities Appellate Tribunal ("SAT") recently passed an order¹ upholding SEBI's findings against Alchemist Infra Reality Limited². The SAT order along with recent pronouncement by the Supreme Court³ have probed unregulated investment arrangements to conclude whether or not they constitute a 'collective investment scheme' ("CIS"), as CIS are required to be registered with SEBI.

This Hotline analyzes SEBI's findings in the matter of Alchemist Infra Reality Limited.