‘Off-market’ transfer of securities by FPI
Summary
This circular permits Foreign Portfolio Investors to execute a one-time off-market transfer of securities to facilitate relocation to an International Financial Services Centre. The Designated Depository Participant must conduct due diligence and approve the transfer, which implies a deemed application for surrender of FPI registration. This provision operates without prejudice to applicable tax laws and FEMA regulations.
Text
The Finance Act, 2021 provides tax incentives for relocating foreign funds to International Financial Services Centre (IFSC) in order to make the IFSC in GIFT City a global financial hub.
In view of the above objective and to further facilitate such ‘relocation’, it has been decided that a FPI (‘original fund’ or its wholly owned special purpose vehicle) may approach its DDP for approval of a one-time ‘off-market’ transfer of its securities to the ‘resultant fund’. The terms ‘original fund’, ‘relocation’ and ‘resultant fund’ will have the same meaning as assigned to them under the Finance Act, 2021.
The DDP after appropriate due diligence may accord its approval for a one-time ‘off- market’ transfer of securities for such relocation.
Relocation request will imply that the FPI has deemed to have applied for surrender of its registration and the DDP may be guided by the guidelines pertaining to surrender of FPI registration.
The ‘off-market’ transfer shall be allowed without prejudice to any provisions of tax laws and FEMA.
Para 3, Part C of SEBI Circular No. IMD/FPI&C/CIR/P/2019/124 dated November 05, 2019 stands modified to the extent of para 2 above.
DDPs and Custodians are requested to bring the contents of this circular to the notice of their clients.
The circular is issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992.
Source: SecMarx — ‘Off-market’ transfer of securities by FPI. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.