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TMI BlogKnow Your Client Requirements for Foreign Portfolio Investors (FPIs)X X X X Extracts X X X X X X X X Extracts X X X X ..... s (KRAs) 11. Alternative Investment Funds (AIFs) Sir/ Madam, Subject: Know Your Client Requirements for Foreign Portfolio Investors (FPIs) 1. This has reference to SEBI circular No CIR/MIRSD/11/2012 dated September 05, 2012 and subsequent SEBI circular No. CIR/MIRSD/07/2013 dated September 12, 2013 whereby risk based documentation requirements were prescribed for Know Your Client (KYC) requirements of eligible foreign investors classified as category I, II and III investing under Portfolio Investment Scheme (PIS) route. KYC of FPIs is accordingly being done. 2. Upon a review, it has been decided to make the following changes :- (a) Identification and verification of Beneficial Owners (i) Beneficial Owner (BO) is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficial owner of the material shareholder/ owner entity. Only beneficial owner with holdings equal above the materiality thresholds in the FPI need to be identified through the aforesaid look through principle. (vi) Where no material shareholder/owner entity is identified in the FPI using the materiality threshold ((referred at (iii) (iv) above) for controlling ownership interest basis and also on control basis (for companies and trusts), BO shall be the senior managing official of the FPI. (vii) In case of companies/ trusts represented by service providers like lawyers/ accountants, FPIs should provide information of the real owners/ effective controllers of those companies / trusts. (viii) If the BO exercises controls through mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 2 This List should be certified by FPI. FPI should also certify that there are no other BOs other than those referred in list. The existing FPIs should provide the list of BOs (in aforementioned format) within six months from the date of this circular. (c) Indians as BO of FPIs In reply to FAQ 91, it has been clarified that NRI/PIO is not eligible to make investments as an FPI. Accordingly, a company which is majority owned by one or more NR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t they have not issued and do not maintain any outstanding bearer shares. Also, FPIs should certify that they will not issue bearer shares. In case existing FPIs or their investors identified on basis of threshold for identification of BO in accordance with PMLA Rules do not conform to the above requirements, they shall ensure compliance within six months of the date of this circular. (e) KYC review As per SEBI circular dated September 12, 2013, eligible foreign investors shall be subject to KYC review as and when there is any change in material information / disclosure. It is however decided that there should be comprehensive KYC review of FPIs on a periodical basis. The KYC review (including change in BOs / their holdings) s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal document for all category of FPIs. (g) Exempted documents to be provided during investigations/ enquiry (i) SEBI vide circular dated September 12, 2013 has exempted FPIs from furnishing certain supporting KYC documents depending on risk involved. It has been decided that in respect of exempted documents, FPIs concerned should submit an undertaking to DDP/ Custodians that upon demand by Regulators/ Law Enforcement Agencies, the relevant documents would be provided. (ii) Further, SEBI vide circular dated September 12, 2013 has exempted Category III FPIs from submission of proof of address of BOs, Senior Management and Authorised Signatories. Since Category III FPIs are high risk investors, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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