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Our Investor Bureau
Mumbai, Jan 21: The Association of Agri-Plantation Companies of India (AAPCI) has urged Sebi to reduce the proposed Rs 10 crore net worth requirement for plantation companies to Rs 3 crore. The final draft regulations on collective investment schemes were presented to Sebi on December 31 by the committee headed by SA Dave.
"The proposed condition of maintaining a net worth of Rs 10 crore is too high to be achieved and is also not required for managing collective investment schemes. At the same time, the condition of maintaining Rs 10 crore net worth will discourage participation from small entrepreneurs," said an association memorandum presented to Sebi on Thursday. According to the association's officials, not more than 10-12 companies will qualify if the threshold limit is Rs 10 crore.
The association officials met Sebi executive director Ashok Kacker on Thursday and said that if the draft regulations are implemented in their present form, they will defeat the very purpose of encouraging legitimateinvestment and safegaurding investors' interest. The association delegates will meet Dave, chairman of the committee that recommended the regulations on plantation companies, on Friday.
The association has also stated that the proposed registeration fee of Rs 25 lakh is on the higher side and has requested it to be brought down to Rs 2.5 lakh. "Besides, there are a number of unproductive expenses proposed which will increase the cost of investment, thereby either defeating the investor's purpose of investing or company's purpose of earning profit," said the memorandum.
The association has stated that as a whole if too many checks and restrictions are imposed, the entire sector of collective agro forestry and integrated farming will become totally unviable, unfeasible and impractical.
The two-tier system proposed for plantation companies along the lines of the mutual funds industry, the association has said, "is difficult to accept as the functioning and nature of business carried on by agro plantationand other investock companies are entirely different from those of mutual funds." The committee had recommended that all collective investment schemes shall be constituted in the form of a trust and the instrument of the trust shall be in the form of a deed duly approved by Sebi and executed by the collective investment management company in favour of the trustee.
AAPCI has also suggested that Sebi consider a few more aspects relating to the industry that have not been taken up by the Dave committee. These include reschedulement of payments, existing multi-layer marketing system, installment and deferred plan for small investors among others.
The Dave committee had proposed a three-year timeframe for existing companies to come to terms with the new regulations. While appreciating that, the association has suggested that adherence to norms should be linked with the quantum of funds mobilised by the existing companies.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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