Regulation 9 - Conditions for eligibility - Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999

Conditions for eligibility 9. The Board shall not consider an application for the grant of a certificate unless the applicant satisfies the following conditions, namely:- a) the applicant is set up and registered as a company under the Companies Act, 1956; b) the applicant has, in its Memorandum of Association specified the managing of collective investment scheme as one of its main objects; 1 [ (c) the applicant or its promoters should have a sound track record and general reputation of fairness and integrity in all their business transactions. Explanation.- For the purposes of this clause sound track record shall mean that, (i) the applicant or its promoter should be carrying on business in financial services or in the relevant field, in which collective investment schemes are proposed to be launched, for a period of not less than five years; (ii) the networth of applicant or its promoter is positive in all the immediately preceding five years; (iii) the applicant or its promoter has profits after providing for depreciation, interest and tax in three out of the immediately preceding five years, including the fifth year; and (iv) the applicant has a net worth of not less than rupees fifty crores on a continuous basis: Provided that the applicant shall have a networth not less than rupees hundred crore till it has profits for five consecutive years in case the requirements under sub-clause (iii) of clause (c) of this regulation is not fulfilled; ] d) the applicant is a fit and proper person for the grant of such certificate; e) the applicant has adequate infrastructure to enable it to operate collective investment scheme in accordance with the provision of these regulations; f) the directors or key personnel of the applicant shall consist of persons of honesty and integrity having adequate professional experience in related field and have not been convicted for an offence involving moral turpitude or for any economic offence or for the violation of any securities laws; g) at least fifty per cent of the directors of such Collective Investment Management Company shall consist of persons who are independent and are not directly or indirectly associated with the persons who have control over the Collective Investment Management Company; h) no person, directly or indirectly connected with the applicant has in the past been refused registration by the Board under the Act. Explanation: For the purposes of this clause, the Board shall take into account whether the previous application for a certificate of any person, directly or indirectly, connected with the applicant has been rejected by the Board or any disciplinary action has been taken against such person under the Act or any of the rules or any of the regulations made under the Act. (i) at least one of the directors, on the Board of the Collective Investment Management Company, who is not subject to retirement, is a representative of the trustee; (j) the Collective Investment Management Company is not a trustee of any collective investment scheme; (k) in case the applicant is an existing collective investment scheme, it complies with the provisions of Chapter IX of these regulations. ************* NOTES:- 1. Substituted vide Notification No. SEBI/LAD-NRO/GN/2022/84 dated 10-05-2022 before it was read as, c) the applicant has a net worth of not less than rupees five crores: Provided that at the time of making the application the applicant shall have a minimum net worth of rupees three crores which shall be increased to rupees five crores within three years from the date of grant of registration;