‘Art funds’ are under our purview, asserts Sebi

However, some companies involved in the art business maintained that they don’t come under the Sebi definition of CIS schemes. Religare Head (Wealth Management Group) Amit Sarup said, “We welcome the regulation as it is a step in the right direction to regulate the art industry but having said that, the notification is meant for ‘collective investment schemes’ whereas our fund comes under the trust structure. Hence the notification is not meant for us.”. Religare recently launched its art fund called Pratham.

Copal Art Gallery founder Ajay Seth said, “We have a bank from which we help investors buy paintings and sell paintings, So clearly we do not come under the collective investment scheme, which first collects the money from the investors, buys the painting and then sells.” Copal Art Gallery has launched three art funds.

The Sebi move follows the entry of a number of art schemes that raised funds from the investors. Art funds operate by pooling in money from select investors and use it to buy art objects that have huge appreciation potential in a short period of time.

“The art fund market is unorganised. One organisation even launched an art index to track the prices/valuation of such art funds,” said a market source. The regulator has warned that it would take appropriate actions, civil and criminal, against funds or companies that violate the Sebi guidelines.