(1) Where an application made under regulation 4 for grant of registrationdoes not satisfy the conditions specified in regulation 9, the Board may rejectthe application after giving the applicant a reasonable opportunity of beingheard and inform the applicant of the same.
(2) The decision shall be communicated to the applicant by the Board within30 days of such decision stating therein the grounds on which the applicationhas been rejected.
CHAPTER III BUSINESS ACTIVITIES AND OBLIGATIONS OF COLLECTIVE INVESTMENT MANAGEMENT COMPANY Restrictions on business activities
13. The Collective Investment Management Company shall not :
a) undertake any activity other than that of managing the 19 [collective investment scheme];
b) act as a trustee of any 20 [collective investment scheme];
17 Substituted by the SEBI (Collective Investment Schemes) (Amendment) Regulations, 2014,w.e.f. 9-1-2014.
18Inserted, ibid.
19 Substituted by the SEBI (Collective Investment Schemes) (Amendment) Regulations, 2014,w.e.f. 9-1-2014.
20ibid.
c) launch any 21 [collective investment scheme] for the purpose of investing in securities;
d) invest in any 22 [collective investment scheme] floated by it.
Provided that a Collective Investment Management Company may invest in its own 23 [collective investment scheme],
(i) if it makes a disclosure of its intention to invest in theoffer document of the 24 [collective investment scheme], and
(ii) does not charge any fees on its investment in that 25 [collective investment scheme].
Obligations of Collective Investment Management Company
14. Every Collective Investment Management Company shall:
(a) be responsible for managing the funds or properties of the 26 [collective investment scheme] on behalf of the unit holders;
(b) take all reasonable steps and exercise due diligence to ensurethat the 27 [collective investment scheme] is managed in accordance with the provisions ofthese regulations, offer document and the trust deed;
(c) exercise due diligence and care in managing assets and fundsof the 28 [collective investment scheme];
(d) be responsible for the acts of commissions and omissions byits employees or the persons whose services have been availed byit;
(e) remain liable to the unit holders for its acts of commission oromissions, notwithstanding anything contained in any contract oragreement;
(f) be incompetent to enter into any transaction with or through itsassociates, or their relatives relating to the 29 [collective investment scheme]:
Provided that in case the Collective Investment ManagementCompany enters into any transactions relating to the 30 [collective investment scheme] withany of its associates, a report to that effect shall immediately besent to the trustee and to the Board.
(g) appoint registrar and share transfer agents;
(h) abide by the Code of Conduct as specified in the ThirdSchedule;
(i) give receipts for all monies received by it and give a report tothe Board every month, particularly of receipts and payments;
(j) hold a meeting of the Board of Directors to consider the affairsof 31 [collective investment scheme] at least twice in every three months;
21 Substituted by the SEBI (Collective Investment Schemes) (Amendment) Regulations, 2014,w.e.f. 9-1-2014.
22ibid.
23ibid.
24ibid.
25ibid.
26ibid.
27ibid.
28ibid.
29ibid.
30ibid.
(k) ensure that its officers or employees do not make improper useof their position or information to gain, directly or indirectly, anadvantage for themselves or for any other person or to causedetriment to the 32 [collective investment scheme];
(l) obtain adequate insurance against the property of the 33 [collective investment scheme];
(m) comply with such guidelines, directives, circulars andinstructions as may be issued by the Board from time to time, on thesubject of collective investment schemes.
Submission of information and documents