Regulation 5 - Categories of foreign portfolio investor - Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014

Categories of foreign portfolio investor. 5. An applicant shall seek registration as a foreign portfolio investor in one of the categories mentioned hereunder or any other category as may be specified by the Board from time to time: (a) Category I foreign portfolio investor which shall include Government and Government related investors such as central banks, Governmental agencies, sovereign wealth funds and international or multilateral organizations or agencies; 4 [ Explanation: A government agency shall mean an entity in which more than 75% of ownership or control is held by the Government of a foreign country. ] (b) Category II foreign portfolio investor which shall include: (i) appropriately regulated broad based funds such as mutual funds, investment trusts, insurance/reinsurance companies; (ii) appropriately regulated persons such as banks, asset management companies, investment managers/ advisors, portfolio managers 1 [, broker dealers and swap dealers]; (iii) broad based funds that are not appropriately regulated but whose investment manager is appropriately regulated: Provided that the investment manager of such broad based fund is itself registered as Category II foreign portfolio investor: Provided further that the investment manager undertakes that it shall be responsible and liable for all acts of commission and omission of all its underlying broad based funds and other deeds and things done by such broad based funds under these regulations. (iv) university funds and pension funds; and (v) university related endowments already registered with the Board as foreign institutional investors or sub-accounts. Explanation 1.-For the purposes of this clause, an applicant seeking registration as a foreign portfolio investor shall be considered to be appropriately regulated if it is regulated or supervised by the securities market regulator or the banking regulator of the concerned foreign jurisdiction, in the same capacity in which it proposes to make investments in India. Explanation 2.- A) For the purposes of this clause, broad based fund shall mean a fund, established or incorporated outside India, which has at least twenty investors, with no investor holding more than forty-nine per cent of the shares or units of the fund: Provided that if the broad based fund has an institutional investor who holds more than forty nine per cent of the shares or units in the fund, then such institutional investor must itself be a broad based fund: 2 [Provided further that if a foreign portfolio investor has a Bank, Sovereign Wealth Fund, Insurance/ Reinsurance company or a Pension Fund as its institutional investor, then such an applicant shall be deemed to be broad based subject to the condition that such institutional investor(s) shall, jointly or separately, hold more than fifty percent of the shares or units of the fund in the applicant fund at all times: Provided also that in cases where broad based status is achieved on the basis of investor(s) of an underlying fund, then such underlying fund shall also be required to fulfil the extant eligibility requirements as specified for foreign portfolio investors from time to time by the Board.] B) For the purpose of clause A of this Explanation, for ascertaining the number of investors in a fund, direct investors as well as underlying investors shall be considered. C) For the purpose of clause B of this Explanation, only investors of entities which have been set up for the sole purpose of pooling funds and making investments, shall be considered for the purpose of determining underlying investors. 3 [ D) Exit of some investors from a broad based fund will not result in immediate loss of Category II status of such fund. Such fund may regain broad based status within a period of 90 days, failing which, the fund shall be appropriately recategorised.] (c) Category III foreign portfolio investor which shall include all others not eligible under Category I and II foreign portfolio investors such as endowments, charitable societies, charitable trusts, foundations, corporate bodies, trusts, individuals and family offices. *********** 1 Inserted by the Securities and Exchange Board of India (Foreign Portfolio Investors) (Amendment) Regulations, 2018, w.e.f. 05-04-2018. 2 Inserted by the Securities and Exchange Board of India (Foreign Portfolio Investors) (Amendment) Regulations, 2018, w.e.f. 05-04-2018. 3 Inserted by the Securities and Exchange Board of India (Foreign Portfolio Investors) (Amendment) Regulations, 2018, w.e.f. 05-04-2018. 4. Inserted vide Notification No. SEBI/LAD-NRO/GN/ 2018 /58 dated 31-12-2018