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New SEBI FPI Beneficial Owner Disclosure Norms

Introduction:

The Foreign Portfolio Investor (“FPI”) regime is a foreign investments’ entry route in India, whereby FPIs can invest in Indian securities, subject to compliance with India’s foreign exchange control laws and the regulatory framework issued by the Securities and Exchange Board of India (“SEBI”). As part of the Know Your Customer (“KYC”) process for FPI registration, identification and verification of Beneficial Owner(s) (“BO”) is required to be undertaken as per Rule 9 of the Prevention of Money Laundering (Maintenance of records) Rules, 2005 (“PMLR”),[1] which is a part of the Indian AML/ CFT legal framework.Continue Reading New SEBI FPI Beneficial Owner Disclosure Norms

SEBI Clarifies Applicability of Portfolio Managers Regulations to an Indian Manager of an Offshore Fund

In an interpretative letter sought under the SEBI (Informal Guidance) Scheme, 2003 (“Informal Guidance”), the markets regulator has clarified that the investment manager of an alternative investment fund (“AIF”) can provide investment management services to an offshore fund only as a SEBI-licensed  portfolio manager under the SEBI (Portfolio Managers) Regulations, 2012 (“PM Regulations”). SEBI also reiterated that the investment managers of AIFs are considered to be regulated by SEBI. In this post, we will explore the queries, SEBI’s responses, and implications for the industry.Continue Reading SEBI Clarifies Applicability of Portfolio Managers Regulations to an Indian Manager of an Offshore Fund

Back to the future - restoring the Mauritius route for FPI investments

Background

On September 23, 2019, the Securities and EXCHANGE Board of India (“SEBI”) notified the SEBI (Foreign Portfolio Investors) Regulations, 2019 (“New FPI Regulations”), overhauling the erstwhile SEBI (Foreign Portfolio Investors) Regulations, 2014 (“Erstwhile FPI Regulations”). Under the New FPI Regulations, SEBI recategorised FPIs in to two categories (as against the three categories under the Erstwhile FPI Regulations), based on their regulatory status and jurisdiction of residence. Under the New FPI Regulations, Category I FPIs include sovereign wealth funds, pension funds, appropriately regulated entities, certain endowments and other entities from the Financial Action Task Force (FATF) member countries, which are appropriately regulated funds or unregulated funds whose investment manager is appropriately regulated and registered as Category I FPI or is owned to the extent of at least 75% by certain Category I FPIs. Category II FPIs include entities that do not qualify for Category I status under the New FPI Regulations. Further, on account of the overhauling and recategorisation under the New FPI Regulations, those Category II FPIs under the Erstwhile FPI Regulations, which did not qualify to be recategorised as Category I FPIs under the New FPI Regulations got recategorised as Category II FPIs under the New FPI Regulations, along with Category III FPIs under the Erstwhile FPI Regulations. Hence, with one stroke of the pen, Mauritius based FPIs became disentitled for Category I status as Mauritius is not an FATF member.
Continue Reading Back to the Future: Restoring the Mauritius Route for FPI investments