INDIA: SEBI publishes rules on India QFIs

Tuesday January 17 2012

Further to the update of 6 January, SEBI has published a circular announcing that India foreign investors (termed as Qualified Foreign Investors/ QFI) who meet prescribed Know Your Customer requirements may invest in equity shares listed on the recognized stock exchanges and in equity shares offered to public in India. In order to enable this they must hold equity shares in a demat account opened with a SEBI registered qualified Depository Participant (DP). The DP shall ensure that transactions of QFI are limited only to the following:

– Purchase of equity shares in public issues, to be listed on recognised stock exchanges.

– Purchase of listed equity shares through SEBI registered stock brokers, on recognized stock exchanges in India.

– Sale of equity shares which are held in their demat account through SEBI registered stock brokers.

– Purchase of equity shares against rights issues

– Receipt of bonus shares or receipt of shares on stock split/ consolidation

– Receipt of equity shares due to amalgamation, demerger or such other corporate actions, subject to the investment limits.

– Receipt of dividends. – Tender equity shares in open offer in accordance with SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

– Tender equity shares in open offer in accordance with SEBI (Delisting of Equity Shares) Regulations, 2009. The circular also details the account opening procedure and manner of operation by QFIs, as well as investment restrictions and monitoring of investment limits for QFIs.

Among others, QFI shall not issue offshore derivatives instruments/ participatory notes, and the total shareholding held by a QFI shall not exceed five percent of paid up equity capital of the company at any point of time. The aggregate shareholding of all QFIs shall not exceed ten percent of the paid up equity capital of the company at any point in time.

Click on the above link for more details.