Looking to file ITR? /> File your ITR with Clear in 48 hours
Get Expert Assistance
The SEBI (Foreign Portfolio Investors) Regulations, 2014 regulate the registration and procedures of the foreign investors proposing to make portfolio investments in India.
The Securities and Exchange Board of India (SEBI) issued a circular on 10 April 2018 regarding the clarification on clubbing of investments limits of Foreign Portfolio Investors (FPI). The SEBI issued this circular as various stakeholders sought guidance on clubbing investment limits applied to a foreign government and its related entities.
Since SEBI monitors investments by foreign governments and their related entities, i.e. sovereign wealth funds, foreign central banks and foreign governmental agencies registered as FPIs in India, it issued the circular clarifying the clubbing of investment limits of FPIs.
However, SEBI’s 10 April 2018 circular created challenges for FPIs, and various representations were made against it. The SEBI issued another circular on 13 December 2018, suppressing the directions given in the 10 April 2018 circular, and provided a revised framework on clubbing of investment limits of FPIs. These directions on the clubbing of investment limits of FPIs are discussed below.
The investment limits of the FPIs will be clubbed together on either the basis of-
There will be no clubbing of investment limits of the following FPIs based on common control in case of-
Public retails funds means-
Control includes either or all of the following-
Investment limits of two or more FPIs, including foreign governments or their related entities having indirect or direct common ownership of more than 50% or control, their investment limits will be clubbed at the investment limit of 10% applicable to a single FPI.
The investment by foreign government agencies will also be clubbed with the investment by a foreign government or its related entities if they form part of an investor group at a 10% FPI investment limit for a single company.
There will be no clubbing of investments of foreign governments or their related entities that are from different states or provinces of a country with a federal structure, provided the investing entities have different control and ownership.
When the Indian government has entered into a specific treaty or agreement with the government of another country that specifically recognises certain entities to be separate and distinct, SEBI may relax the clubbing provisions for these FPIs during the validity of such a treaty or agreement.
In the case where the total investments by a group of FPIs clubbed based on the SEBI circular breaches the 10% investment limit in a single company, the respective FPIs will have the following alternatives-
Disclaimer: The materials provided herein are solely for information purposes. No attorney-client relationship is created when you access or use the site or the materials. The information presented on this site does not constitute legal or professional advice and should not be relied upon for such purposes or used as a substitute for legal advice from an attorney licensed in your state.