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TMI BlogEasing of Access Norms for investment by FPIsX X X X Extracts X X X X X X X X Extracts X X X X ..... Clause 5.4 of Operational Guidelines for DDPs ref. SEBI circular dated January 08, 2014 Change in DDP/Custodian Existing provision Revised provision In case the FPI wishes to change the DDP/Custodian, the request for change shall be intimated to SEBI through the concerned DDP/Custodian. On receipt of no objection from the existing transferor DDP/Custodian and acceptance from the proposed transferee DDP/Custodian, then approval from SEBI shall be sought by concerned FPI. In case, the FPI or its Global Custodian wishes to change the local custodian/DDP, the request for change shall be forwarded to new local custodian/DDP. In case, the Global Custodian of FPI wishes to change the local custodian/DDP, then the request for change can be sent by the Global Custodian on behalf of its underlying FPI clients provided such Global Custodian has been explicitly authorized to take such steps by the client. Upon receipt of no objection from the transferor local custodian/DDP, the transferee local custodian/DDP shall approve the change and intimate SEBI about the change. In case, the request for change in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e requirement prescribed by SEBI/RBI and changes therein as may be notified from time to time. (c) Placing reliance on due diligence carried out by erstwhile DDP at the time of change of Custodian/ DDP of FPIs: At the time of change of local custodian/DDP by an FPI, the new local custodian/DDP is required to carry out the adequate due diligence requirement to ascertain the eligibility of the FPI. The due diligence by the new DDP on an already registered FPI at the time of change of local custodian/DDP often leads to increased documentation and sometimes delays the transition. Accordingly, the following change has been made:-: Existing provision (e-mail dated July 02, 2015) Revised provision With respect to the process of change of Custodian/DDP by an FPI, it is informed that both old (i.e. transferor) as well as new Custodian/DDP (i.e. transferee) shall be required to carry out the adequate due diligence in the process. With respect to the process of change of local custodian/DDP by an FPI, it is informed that the new DDP (i.e. transferee) may rely on the due diligence carried out by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... continue to be considered as being broad based. i. Where the newly added share class is not broad based, then an undertaking is to be obtained by the DDP that the newly added share class will become broad based within 90 days from the date of DDP approval letter. ii. In case of simultaneous addition of more than one share class, which are not broad based, then an undertaking is to be obtained by the DDP that all the newly added share classes will become broad based within 15 days from the date of DDP approval letter. In case common portfolio of Indian securities is maintained across all classes of shares/fund/sub-fund and broad based criteria are fulfilled at portfolio level after addition of share class, prior approval from DDP is not required. However, in case of segregated portfolio in India, every fund / sub fund / share class needs to separately fulfil broad based criteria. Further, in case of addition of classes of shares for segregated portfolio, the FPI shall be required to obtain prior approval from DDP. However, for deletion of share classes of shares of segregated portfolio, an intimation should be provided to DDP forthwith. For granting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position shall continue in the FPI regime. Yes. In the FII regime, wherever an entity engages Multiple Investment Managers (MIM structure) it can obtain multiple registrations with SEBI. Further, investments made under such multiple registrations were clubbed for the purpose of monitoring of investment limits. The same position shall continue in the FPI regime. Also, such applicants can appoint different local custodians/DDPs. FAQ 103. Can a DDP register proprietary accounts for the purposes of internal segregation (other than for MIM purposes)? Are there any limitations on how many such proprietary FPIs can be registered? Existing provision Revised provision It has already been clarified in reply to Q6 of the FAQs that in the FII regime, wherever an entity engages Multiple Investment Managers (MIM structure) it can obtain multiple registrations with SEBI. These applicants are required to appoint the same local custodian. Further, investments made under such multiple registrations are clubbed for the purpose of investment limits. The same position shall continue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and (ii), such entities shall also be allowed to undertake proprietary investment by taking separate registration with SEBI. FAQ 21. Can a Private Bank/Merchant Bank invest on behalf of its clients? Existing provision Revised provision No. Private Bank/Merchant Bank cannot invest on behalf of their clients. They are only permitted to make proprietary investments. Please refer to reply to FAQ 20. FAQ 162. A private bank namely Y is one of the investors in a fund namely X , which seeks to get registered as an FPI. Y intends to invest on behalf of multiple clients. Can a DDP consider X eligible for grant of registration as an FPI? Existing provision Revised provision While assessing the eligibility of an FPI applicant, a DDP may refer to the reply to Q# 21 of the FAQs, which states that private bank/merchant bank cannot invest on behalf of their clients. They are only permitted to make proprietary investments. FAQ 162 is deleted. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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