9911796707
TMI BlogSecurities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019X X X X Extracts X X X X X X X X Extracts X X X X ..... the Official Gazette. Definitions. 2. (1) In these regulations, unless the context otherwise requires, the terms defined herein shall bear the meanings assigned to them below, and their cognate expressions and variations shall be construed accordingly,- (a) "Act" means the Securities and Exchange Board of India Act, 1992; (b) "appropriately regulated" entity means an entity which is regulated by the securities market regulator or the banking regulator of home jurisdiction or otherwise, in the same capacity in which it proposes to make investments in India; (c) "Bilateral Memorandum of Understanding with the Board" shall mean a bilateral Memorandum of Understanding between the Board and any authority outside India that provides for information sharing arrangement as specified under clause (ib) of sub-section (2) of Section 11 of the Act; (d) "Board" means the Securities and Exchange Board of India established under section 3 of the Act; (e) "certificate" means a certificate of registration granted to a foreign portfolio investor by the designated depository participant on behalf of the Board under these regulations; (f) "control" includes the right to appoin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment Act, 1999, the Companies Act, 2013, the Securities Contracts (Regulation) Act, 1956, the Depositories Act, 1996 or the rules and regulations made thereunder shall have the same meaning respectively assigned to them in those Acts or rules or regulations or any statutory modification or re-enactment thereto. CHAPTER II REGISTRATION OF FOREIGN PORTFOLIO INVESTORS Application for grant of certificate as a foreign portfolio investor. 3. (1) No person shall buy, sell or otherwise deal in securities as a foreign portfolio investor unless it has obtained a certificate granted by a designated depository participant on behalf of the Board. Explanation - An offshore fund floated by an asset management company that has received no-objection certificate in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, shall be required to obtain registration as a foreign portfolio investor, for investment in securities in India, within one hundred and eighty days from the date of notification of these regulations. (2) An application for the grant of certificate as a foreign portfolio investor shall be made to a designated depository participant in the F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other criteria specified by the Board from time to time: Provided that clause (a), (d) and (e) shall not apply to an applicant incorporated or established in an International Financial Services Centre. Categories of foreign portfolio investor. 5. An applicant seeking registration as a foreign portfolio investor may apply 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 - (i) Government and Government related investors such as central banks, sovereign wealth funds, international or multilateral organizations or agencies including entities controlled or at least 75% directly or indirectly owned by such Government and Government related investor(s); (ii) Pension funds and university funds; (iii) Appropriately regulated entities such as insurance or reinsurance entities, banks, asset management companies, investment managers, investment advisors, portfolio managers, broker dealers and swap dealers; (iv) Entities from the Financial Action Task Force member countries which are - I. appropriately regulated funds; II. unregulated funds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration, bearing registration number generated by National Securities Depositories Limited, as specified in the First Schedule to an applicant if it is satisfied that the applicant is eligible and fulfils the requirements as specified in these regulations. (2) The designated depository participant shall endeavour to dispose of the application for grant of certificate of registration as soon as possible but not later than thirty days after receipt of application by the designated depository participant, or after the information called for under regulation 6 has been furnished; whichever is later. (3) Upon grant of certificate of registration to the applicant, the designated depository participant shall remit the fees, as specified in Part A of the Second Schedule, received from the applicant to the Board. (4) If an applicant seeking registration as a foreign portfolio investor has any grievance with respect to its application or if the designated depository participant has any question in respect of interpretation of any provision of this regulation, it may approach the Board for appropriate instructions. (5) The foreign portfolio investor needs to have a valid registration as lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The suspension and cancellation of the certificate of registration granted by the Board under these regulations, shall be dealt with in the manner as provided in Chapter V of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008. (3) When the foreign portfolio investor fails to pay the required fees for continuance of registration within the specified due date and such foreign portfolio investor does not have any cash or security or derivative position in India, such foreign portfolio investor shall be deemed to have applied for surrender of its registration and the designated depository participant of such foreign portfolio investor shall process the surrender after obtaining the approval from the Board. (4) Any foreign portfolio investor desirous of surrendering the certificate of registration may request for such surrender to the designated depository participant who shall accept the surrender of the certificate of registration after obtaining approval from the Board. (5) While accepting the surrender of registration, the designated depository participant may impose such conditions as may be specified by the Board. CHAPTER III APPROVAL OF DESIGNATED ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for grant of approval to act as designated depository participant, upon being satisfied that the applicant has sufficient experience in providing custodial services and that the grant of such approval is in the interest of the development of the securities market: Provided that such entity shall be registered with the Board as a participant and custodian, and shall have a tie up with Authorised Dealer Category-1 bank. Furnishing of information, clarification and personal representation. 12. (1) The Board may require the applicant or the depository of which the applicant is a participant to furnish such further information or clarification as may be considered necessary for grant of approval to act as a designated depository participant. (2) The applicant or its authorised representative shall, if so required by the Board, appear before it for personal representation in connection with the grant of approval. Procedure for granting of approval to designated depository participant. 13. (1) After considering the application made under regulation 10 of these regulations, the Board may grant approval to the applicant, upon being satisfied that the applicant is eligible and fulfils ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) contravenes any of the provisions of the securities laws or directions, instructions or circulars issued thereunder; the Board may, without prejudice to any action under the securities laws or directions, instructions or circulars issued thereunder, by an order suspend or withdraw such approval after providing the designated depository participant a reasonable opportunity of being heard. Surrender of approval. 18. (1) Any designated depository participant, who has been granted approval under these regulations, desirous of surrendering the approval granted, may make a request for such surrender to the Board. (2) While accepting the surrender under sub-regulation (1), the Board may impose such conditions as it deems fit for the protection of investors or the clients of the designated depository participant or the securities market and such person shall comply with such conditions. CHAPTER IV INVESTMENT CONDITIONS AND RESTRICTIONS Commencement of investment. 19. No foreign portfolio investor shall make any investment in securities in India without complying with the provisions of this Chapter. Investment restrictions. 20. (1) A foreign portfolio investor shall invest on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Capital and Disclosure Requirements) Regulations, 2018; (iv) any other transaction specified by the Board; (c) The transaction involving dealing in securities by a foreign portfolio investor shall be only through stock brokers registered with the Board; (d) Nothing contained in clause (c) of this sub-regulation shall apply to - (i) transactions in Government securities and such other securities falling under the purview of the Reserve Bank of India carried out in the manner as specified by the Reserve Bank of India; (ii) sale of securities in response to a letter of offer sent by an acquirer in accordance with the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011; (iii) sale of securities in response to an offer made by any promoter or acquirer in accordance with the Securities and Exchange Board of India (Delisting of Equity shares) Regulations, 2009; (iv) sale of securities in accordance with the Securities and Exchange Board of India (Buy-back of Securities) Regulations, 2018; (v) divestment of securities in response to an offer by Indian companies in accordance with Operative Guidelines for Disinvestment of Share ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regulations, may continue to be held in the physical form, if such shares cannot be dematerialised: Provided further that all the Rights Entitlements may be held or transferred in non-dematerialized form. (5) In respect of investments in the debt securities, the foreign portfolio investors shall also comply with terms, conditions or directions, specified or issued by the Board or Reserve Bank of India, from time to time, in addition to other conditions specified in these regulations. (6) Unless otherwise approved by the Board, securities shall be registered in the name of the foreign portfolio investor as a beneficial owner as defined in clause (a) of sub-section (1) of section 2 of the Depositories Act, 1996. (7) The purchase of equity shares of each company by a single foreign portfolio investor including its investor group shall be below ten per cent of the total paid-up equity capital on a fully diluted basis of the company: Provided that where the total investment under these regulations by a foreign portfolio investor including its investor group exceeds the threshold of below ten per cent of the total paid up equity capital in a listed or to be listed company on a full ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foreign portfolio investors; Explanation - For the purpose of this sub-regulation, where an entity has an investment manager who is from the Financial Action Task Force member country, the investment manager shall not be required to be registered as a Category I foreign portfolio investor; (c) such offshore derivative instruments are issued after compliance with the 'know your client' norms as specified by the Board; and (d) such other conditions as may be specified by the Board from time to time. (2) A foreign portfolio investor shall ensure that any transfer of offshore derivative instruments issued by or on behalf of it, is subject to the following conditions - (a) such offshore derivative instruments are transferred to persons subject to the fulfilment of sub-regulation (1); and (b) prior consent of the foreign portfolio investor is obtained for such transfer, except in cases, where the persons to whom the offshore derivative instruments are to be transferred, are pre-approved by the foreign portfolio investor. (3) A foreign portfolio investor shall fully disclose to the Board any information concerning the terms of and parties to off-shore derivative instruments, by w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; (j) provide any additional information or documents including beneficiary ownership details of their clients as may be required by the designated depository participant or the Board or any other enforcement agency to ensure compliance with the Prevention of Money Laundering Act, 2002 and the rules and regulations specified thereunder, the Financial Action Task Force standards and circulars issued from time to time by the Board; and (k) ensure that securities held by foreign portfolio investors are free from all encumbrances. Explanation - An encumbrance created to meet any statutory and regulatory requirements shall not be considered under this clause. (2) In case of jointly held depository accounts, each of the joint holders shall meet the requirements specified for foreign portfolio investor and each shall be deemed to be holding a depository account as a foreign portfolio investor. (3) Multiple entities registered as foreign portfolio investors and directly or indirectly, having common ownership of more than fifty per cent or common control, shall be treated as part of the same investor group and the investment limits of all such entities shall be clubbed at the investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he custodian of the foreign portfolio investor shall be the same entity. Appointment of custodian. 25. (1) A foreign portfolio investor or a global custodian who is acting on behalf of the foreign portfolio investor, shall enter into an agreement with the designated depository participant engaged by it to act as a custodian, before making any investment under these regulations. (2) In addition to the obligation of custodian under any other regulations, the custodian shall - (a) report to the depositories and the Board on a daily basis the transactions entered into by the foreign portfolio investor in the form and manner specified by the Board or depositories from time to time; (b) monitor investment of the foreign portfolio investors; (c) maintain the relevant true and fair records, books of accounts, and documents including the records relating to transactions of foreign portfolio investors; (d) report the holdings of foreign portfolio investors who form part of investor group to the depositories and the depositories shall club the investment limits to ensure that combined holdings of all these foreign portfolio investors remains below ten per cent of the total paid-up equi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s regarding investments in securities. Preservation of books of accounts, records and documents. 30. Subject to the provisions of any other law, for the time being in force, every foreign portfolio investor shall preserve the books of accounts, records and documents specified in regulation 29 for a minimum period of five years from the date of approval of the surrender or cancellation of registration by the Board. CHAPTER VI GENERAL OBLIGATIONS AND RESPONSIBILITIES OF DESIGNATED DEPOSITORY PARTICIPANTS Obligations and responsibilities of designated depository participants. 31. (1) All designated depository participants who have been granted approval by the Board shall - (a) comply with the provisions of these regulations, as far as they may apply, circulars issued thereunder and any other terms and conditions specified by the Board from time to time; (b) forthwith inform the Board in writing, if any information or particulars previously submitted to the Board are found to be false or misleading, in any material respect; (c) forthwith inform the Board in writing, if there is any material change in the information previously furnished by him to the Board; (d) furnish such i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestor, re-assess the eligibility of such foreign portfolio investor. (3) The designated depository participant shall maintain segregation of activities such that there is no conflict of interest between the activity of grant of registration to a foreign portfolio investor in the capacity of a designated depository participant and its other activities. (4) The designated depository participant shall submit the reports as specified by the Board from time to time. (5) The designated depository participant shall carry out an annual review of its systems, procedures and controls by an independent professional. Explanation: The review shall cover the systems and procedures being followed by them to meet its obligations towards its clients, regulators and other relevant bodies and compliance with the requirements of the regulations and circulars issued by the Board. (6) The designated depository participant shall furnish to the Board annual audit reports on its internal control for a particular calendar year within ninety days of the next calendar year. (7) The designated depository participant shall submit the Action Taken Report, if any, on the audit report on a quarterly basis t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s relating to a designated depository participant for any of the following purposes, namely, - (a) to ensure that the books of account, records including telephone records and electronic records and documents are being maintained by the designated depository participants; (b) to ascertain whether any circumstances exist that would render the designated depository participants unfit or ineligible; (c) to inquire into the complaints received from investors, clients, other market participants or any other person on any matter having a bearing on the activities of the designated depository participants; (d) to ascertain whether the provisions of the securities laws and the directions or circulars issued thereunder are being complied with by the designated depository participants; (e) to ascertain whether the systems, procedures and safeguards which have been established and are being followed by the designated depository participants are adequate; and (f) to investigate suo moto into the affairs of the designated depository participants in the interest of the securities market or in the interest of investors. Notice before inspection. 37. (1) Before undertaking an inspection un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Board shall after consideration of the inspection report, take such action as it may deem fit including action under Chapter V of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008. Appointment of an auditor. 41. The Board shall have the power to appoint an auditor to inspect or investigate, as the case may be, into the books of account, records, documents, infrastructures, systems and procedures or affairs of the applicant or the designated depository participants, as the case may be: Provided that the auditors so appointed shall have the same powers as vested in the inspecting officer under regulation 36 and the applicant or designated depository participants and its directors, officers and employees shall be under the same obligations, towards the auditor so appointed, as are mentioned in regulation 38. Board to recover the expenses. 42. The Board shall be entitled to recover from the designated depository participants or applicant, as the case may be, such expenses including the fees paid to the auditors as may be incurred by it for the purposes of inspecting or investigating the books of account, records, documents, infrastructures, systems ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivilege, obligation or liability acquired, accrued or incurred under the repealed regulations, any penalty, incurred in respect of any violation committed against the repealed regulations, or any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty as aforesaid, shall remain unaffected as if the repealed regulations has never been repealed; (3) After the repeal of Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014, any reference thereto in any other regulations made, guidelines or circulars issued thereunder by the Board shall be deemed to be a reference to the corresponding provisions of these regulations. FIRST SCHEDULE SECURITIES AND EXCHANGE BOARD OF INDIA (FOREIGN PORTFOLIO INVESTORS) REGULATIONS, 2019 [See regulation 7(1)] CERTIFICATE OF REGISTRATION I. In exercise of the powers conferred by sub-section (1A) of section 12 of the Securities and Exchange Board of India Act, 1992 (the "Act"), read with the regulations made thereunder the Board hereby grants a certificate of registration to _________________________________ as a foreign portfolio investor, subject to the condit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of its activity. (2) Every designated depository participant shall pay application fees of ₹ 10,000/- at the time of making application, by way of direct credit through NEFT/RTGS/IMPS in the bank account in the name of "Securities and Exchange Board of India" payable at Mumbai. (3) Every designated depository participant shall pay approval fees of ₹ 5,00,000/- by way of direct credit through NEFT/RTGS/IMPS in the bank account in the name of "Securities and Exchange Board of India" payable at Mumbai, at the time of grant of prior approval by the Board. PART C COLLECTION OF REGULATORY FEES BY FOREIGN PORTFOLIO INVESTOR FROM ODI SUBSCRIBERS [See sub-regulation (4) of Regulation 21] Regulatory Fee (1) A foreign portfolio investor shall collect the regulatory fee of US $ 1000 or any other amount, as may be specified by the Board from time to time, from every subscriber of offshore derivative instrument issued by it and deposit the same with the Board by way of electronic transfer in the designated bank account of the Board. (2) The regulatory fee shall be deposited once every three years beginning April 1, 2017. THIRD SCHEDULE SECURITIES AND EXCHANGE BOARD OF I ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
