Shibu Ltd. and its directors had mobilised funds from investors through different land and plot allotment schemes which satisfied four requirements of a collective investment scheme as defined in section 11AA. It was not

As per Section 15D of the SEBI Act, 1992, if any person, who is required to obtain a certificate of registration from the SEBI for sponsoring or carrying on any collective investment scheme, sponsors or carries on any collective investment scheme, without obtaining such certificate of registration, he shall be liable to a penalty which shall not be less than ₹ 1 lakh rupees but which may extend to ₹ 1 lakh rupees for each day during which he sponsors or carries on any such collective investment scheme subject to a maximum of ₹ 1 crore rupees. Further, Regulation 65 of the SEBI (Collective Investment Schemes) Regulations, 1999 states that the SEBI may, in the interests of the securities market and the investors give such directions as it deems fit in order to ensure effective observance of these regulations, including directions requiring the person concerned to refund any money or the assets to the concerned investors along with the requisite interest or otherwise, collected under the collective investment scheme. Therefore, in view of the above-mentioned provisions, Shibu Ltd. and its directors can be directed to refund illegally mobilised funds to investors and penalised with the amount as stated above. Requirements of section 11AA for Collective Investment Schemes (CIS) under the SEBI Act, 1992 (1) Any scheme or arrangement which satisfies the conditions referred to in sub-section (2) or sub-section (2A) of section 11AA of the SEBI Act, 1992 shall be a collective investment scheme. However, any pooling of funds under any scheme or arrangement, which is not registered with the SEBI 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 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. (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 SEBI Act, 1992. (3) The following scheme or arrangements shall not be Collective Investment Scheme (CIS): (i) made or offered by a co-operative society registered under the Co-operative Societies Act, 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; (iii) being a contract of insurance to which the Insurance Act, 1938, applies; (iv) providing for any Scheme, Pension Scheme or the Insurance Scheme framed under the Employees Provident Fund and Miscellaneous Provisions Act, 1952; (v) under which deposits are accepted under section 58A of the Companies Act, 1956 (now 74 of the Companies Act, 2013); (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 (now section 406 of the Companies Act, 2013); (vii) falling within the meaning of Chit business as defined in clause (d) of section 2 of the Chit Fund Act, 1982; (viii) under which contributions made are in the nature of subscription to a mutual fund; (ix) such other scheme or arrangement which the Central Government may, in consultation with SEBI, notify. Provisions for registration under the SEBI Act, 1992 Section 12 (1B) of the SEBI Act, 1992 states that- "No person shall sponsor or cause to be sponsored or carry on or caused to be carried on any venture capital funds or collective investment schemes including mutual funds, unless he obtains a certificate of registration from the SEBI in accordance with the regulations." With this provision, a ban was imposed on a person carrying on any CIS, unless a certificate of registration is obtained in accordance with the regulations framed by SEBI. Provisions for Application for Grant of Certificate under the SEBI Act, 1992 Regulation 4 of the SEBI (Collective Investment Schemes) Regulations, 1999 provides that any person proposing to carry any activity as a Collective Investment Management Company on or after the commencement of these regulations shall make an application to the SEBI for the grant of registration as specified under these regulations.