The government had clarified through a press release that collective investment schemes are within the purview of Sebi Act, 1992. The committee has pointed out the inadequacy of this measure, referring to the writ petitions in the courts which contend that plantation companies are not within the jurisdiction of Sebi. The argument against Sebi's jurisdiction is that these companies do not operate in the securities market and the bonds issued by them do not constitute securities.

The committee suggests that the government should issue an ordinance which clarifies that the collective investment schemes are within the range of the definition of the expression securities and whatever be thenature of document issued by these companies, they would constitute securities.

The committee has widened the definition of the term "securities" and has suggested that there should be specific provisions in the new legislation directing other authorities like the Department of Company Affairs, Registrar of Companies, Reserve Bank of India, income tax department and police to co-operate with Sebi.

To tackle the "growing evil emanating from collective investment schemes", the committee has recommended sweeping powers for Sebi including enquiry and investigation; power to take over management of the entity concerned for a limited duration; appoint a chairman or additional directors as government or Sebi nominees with special obligations to protect the interest of investors; power to make inventory inspection of the assets of the company; appoint receiver or freeze assets including bank accounts; powers to prosecute manipulators and seek winding-up of such companies.