Securities & Exchange Board of India (SEBI) is a regulatory body established to protect the interests of investors in securities and to promote the development of and to regulate the securities market and for matters connected therewith or incidental thereto. This message is issued by SEBI in the interest of investors with regard to their investments in Agro Bonds/Plantation Bonds etc. of various collective investment entities.

The Central Government vide its press release dated 18.11.97 decided that entities which issue instruments such as Agro Bonds, Plantation Bonds, etc. and the schemes through which such instruments are issued would be treated as Collective Investment Schemes (CIS) coming under the provisions of the SEBI Act, 1992.

Pursuant to the Government press release, SEBI constituted a committee under the chairmanship of Dr. S.A. Dave with representation from the Agro/Plantation industry, to formulate a regulatory framework for Collective Investment Schemes. While finalising the report, the Dave committee also considered the suggestions of the various Collective Investment Entities as well as the Industry Association.

The SEBI Board in its meeting held on 17.8.99 approved the regulations for CIS. On notification of regulations, the entities would be required to get themselves registered with SEBI.

Investors investing in CIS would have done so with certain expectations about the performance of the schemes and the prospects of income accruing from such schemes.

While making such investments the investors would have:

• Taken note of and duly evaluated the various risks specially the risks associated with non realisation of income & Capital losses.

• Satisfied themselves about the viability of the project and verified the background of the promoters.

• Satisfied themselves that there is clear and marketable title of the land claimed to be owned by the entities.

• Insisted that necessary mutations are made in their favour in the land revenue records, in case of land owning schemes.

• Evaluated practicality of the promises of high returns, high incentives, safety of post-dated cheques etc.

• Satisfied themselves that the promoters of these entities have sufficient expertise in agriculture/plantation activities and have the requisite infrastructure.

However, some investors would have experienced that their expectations with regard to income and/or growth have not materialised. And some others would have lost their investments.

The following offices of SEBI may be contacted with regard to investor grievances regarding CIS and for any other information connected thereto:

Investors may however note that as a regulatory body SEBI cannot guarantee or undertake the repayment of money to the investors. It is SEBI's endeavour to educate the investors of the general risk perception of such schemes.

• Investors can also approach District Consumer Redressal forums in case entities fail to honour their commitments or for any deficiency in service.

• For bouncing of cheques, investors can move the Courts under section 138 of the Negotiable Instruments Act. The right to file criminal complaint exclusively vests with the beneficiary of the cheque.

• Investors should note that wherever they do not have a right to the land or to the produce arising out of the land such investment may be a deposit and where a company fails to repay the deposits, it attracts the provisions of section 58A of the Indian Companies Act, 1956. It is clarified that SEBI has no jurisdiction over such deposits.

• Many of the existing Collective Investment Schemes had collected funds from public prior to coming into force of the regulatory jurisdiction of SEBI and any action by SEBI against defaulting entities does not necessarily ensure the refund of money invested by the investors in such entities.

• Once the entities are registered with SEBI, they would be in a position to float new schemes within the regulatory framework of SEBI.

• Mere filing of information with SEBI by entities does not imply that the entities have obtained registration from SEBI.

• No new schemes can be launched by any entity, existing or new, till the entities are granted registration by SEBI.

• Till date no entity has been registered with SEBI.

• Entities cannot issue Agro Bonds / Plantation Bonds etc. without obtaining rating from Credit Rating Agencies registered with SEBI.

• Rating does not guarantee repayment of investments or income thereon. It helps the investor in taking informed decision as the instrument is rated by a professional agency.

• The entities should have filed information with SEBI in response to SEBI's press release/Public notice dated 26.11.97/18.12.97.

• As per the directions of SEBI dated 24.2.98, no entity can mobilise any money from the public or from the investors under their existing schemes unless rating from a credit rating agency has been obtained.

• As per the directions of the Division Bench of Hon'ble Court at Mumbai in W.P.1043/98, entities should prominently display the rating obtained and its implications.

• The entities should issue advertisement in accordance with the SEBI advertisement code.

• The Hon'ble Delhi High Court in writ petition no. 3352/98 has, inter-alia, directed these entities to comply with the circular of SEBI dated 24.2.98. The entities have also been restrained from selling, disposing of and / or alienating their immovable properties or parting with the possession of the same.

The Hon'ble High Court has further stated that its order will not come in the way of entities intending to refund the money to their investors.