Thursday January 9 2014

News Source: Global Disclosures

Focus: Foreign Investment

Type: General

Country: India




Further to the update of 7th October 2013, the Securities and Exchange Board of India (SEBI) has passed changes in respect of foreign investment in India through notification of India Foreign Portfolio Investors Regulations 2014.

Under the new Regulations:

  • Existing FIIs, Sub Accounts and Qualified Foreign Investors (QFIs) shall be merged into a new investor class termed as “FPIs”.
  • SEBI approved Designated Depository Participants (DDPs) shall register FPIs on behalf of SEBI subject to compliance with KYC requirements. 
  • FPI shall be required to seek registration in any one of the following categories: (a) “Category I Foreign Portfolio Investor” which shall include Government and Government related foreign investors etc; (b) “Category II Foreign Portfolio Investor” which shall include appropriately regulated broad based funds, appropriately regulated entities, broad based funds whose investment manager is appropriately regulated, university funds, university related endowments, pension funds etc; (c) “Category III Foreign Portfolio Investor” which shall include all others not eligible under Category I and II foreign portfolio investors.
  • All existing FIIs and Sub Accounts may continue to buy, sell or otherwise deal in securities under the FPI regime.
  • All existing Qualified Foreign Investors (QFIs) may continue to buy, sell or otherwise deal in securities till the period of one year from the date of notification of this regulation. In the meantime, they may obtain FPI registration through DDPs.
  • FPIs shall be allowed to invest in all those securities, wherein Foreign Institutional Investors (FIIs) are allowed to invest.
  • Category I and Category II FPIs shall be allowed to issue, or otherwise deal in offshore derivative instruments (ODIs), directly or indirectly. However, the FPI needs to be satisfied that such ODIs are issued only to persons who are regulated by an appropriate foreign regulatory authority after ensuring compliance with ‘know your client’ norms.

The new legislation will enter into force on the date of its publication in the Offical Gazette of India.

Click on the above link for the Foreign Portfolio Investors Regulations 2014.