Stock market regulator SEBI has directed Osian’s-Connoisseurs of Art Pvt Ltd, an art fund to wind up its existing ‘collective investment scheme’ (CIS).

Osian had raised Rs 102.40 crore from 656 investors.

Osian has also been directed to refund the money to its investors within three months and submit a winding up report. Osian also has to pay the higher of profits earned according to its offer terms or 10 per cent interest a year. The payout would be calculated from the date of investment till the date of refund, said SEBI. Failure to do so would lead to initiation of prosecution proceedings.

SEBI said that it would also refer the case to the Ministry of Corporate Affairs for winding up of Osian.

Osian has been directed not to access the capital market till its collective investment scheme is wound up and monies refunded.

Osian contended that the CIS Regulations applied only to a scheme launched or sponsored by a company and in addition, applied only to plantation/ agro companies. Osian also contended that CIS regulations applied only in case of mobilisation of investments from public and not in case of private placement. It also contended that the units offered by the Art Fund were not ‘securities’.

SEBI observed that Osian had raised Rs 102.40 crore from 656 investors. Citing the recent Supreme Court order on the Sahara optionally fully convertible debentures case, SEBI said, it was not a private placement as an offer to 50 or more persons makes it a public issue.

Finding that Osian’s fund satisfied all conditions of a CIS, SEBI banned the art fund.

> raghavendrarao.k@thehindu.co.in

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