Why should THE TIMESHARE INDUSTRY  

be brought under the 

 SEBI’s COLLECTIVE INVESTMENT SCHEME REGULATIONS, 1999 ?

(The website of a timeshare company claims repeatedly that "Invest once at today"s prices" & "get your holidays at today"s prices-your holidays are inflation-proof")

 WHY SHOULD THEY BE REGULATED ?

1.     Lakhs and lakhs of investors across the Country are investing.

2.    Huge money is collected from the middle class and lower middle class investors.

3.    Lots of promises are made at the time of investment but not kept later.

4.   More and more money is collected again and again every year for purposes ( for which corpus monies  have been collected already in the beginning ).

5.    Lacks transparency and accountability on various counts.There is no one to regulate.

6.  Investors” money is locked and possibly lost forever, as they do not have a structured exit option.

7.  Investors are lured by misleading advertisements offering expensive gifts for investing and for referring, leading to the likes of MLM – Multi Level Marketing.

The key issues:

1.    Steep hike in Annual Amenities Charges, year on year, without any basis, even where huge lump sum amounts had been collected at the time of Original Investment itself.

2.     Sudden introduction of or Levy of Guest Charges in an arbitrary manner, without any logic or purpose.

3.      Unilateral and unjustified increase in Utility Charges at frequent intervals.

4.    No proper accounting or display of accountability for the monies collected initially at the time of investments, for the said purposes including the above.

5.     Accumulation & carry forward of holidays – mis-interpretation of the clauses in the Agreements, to unduly benefit the Timeshare Companies.

6.   Possibility that while on the one hand the investor is not motivated to utilize his entitlement & discouraged by various charges, non-availability and lack of transparency, on the other hand, the Company may be selling the same to outsiders – who are not members – in order to make hefty profits out of such sales.

7.     More importantly, selling of the product to the innocent/gullible investors at a lump sum price, under the guise that it entitles them to  “inflation proof” holidays, has led to large scale dissatisfaction amongst the investors.Go to the websites of some of these companies and you can see how misleading it is!

8.    When a disgruntled investor approaches the companies for an exit option, he/she  is dis-incentivised by means of various deterrents. No proper guidance is given in a timely manner to them on the procedures to be followed to sell it.

9.    In respect of a class of Timeshare Ownership, called Property Timeshare, the initial collection is made to cover the duration of ownership, which is beyond the lives of the original Investors. This class comes squarely under SEBI’s Regulations as the Immovable Assets are managed on behalf of the Investors by the Timeshare Company.

There are many more such issues and the list is endless; the attitude of the Companies is unthinkable. They lack responsibility as the entire money is taken in advance from the investor in full and apparently, having already been unduly benefited, they are not bothered. 

The very fact that they are not regulated makes them more bold and brazen, to commit more such acts. They are selling without enough stocks on hand. Before more investors part with their money, it is pertinent that such Companies come under SEBI Regulations.

How they fall under these Regulations . . . more about it in the next installment !