A M.F. Hussain Painting Is Not A Security

The move of the securities market regulator to bring art funds within the ambit of the securities law regulatory framework is incorrect. In essence, the press release dated February 13, 2008 asserts that 'art funds' are "collective investment schemes".

Collective investment schemes are required to register themselves with the Securities and Exchange Board of India Act under the SEBI (Collective Investment Scheme), 1999 ("the Regulations"). In effect, the press release would imply that registration with SEBI would be required for any entity to launch or float art funds. The press release further states that launching and floating art funds without obtaining a certificate of registration under the Regulations would amount to a violation of the SEBI Act and the Regulations framed, thereby attracting civil and criminal action under the SEBI Act for non-compliance.