Management and advisory services by AMCs to Foreign Portfolio Investors
Summary
SEBI amended restrictions on Asset Management Companies to permit them to provide management and advisory services to specific categories of Foreign Portfolio Investors. The permitted FPI categories include government-related investors, appropriately regulated entities like pension funds and banks, and certain regulated FPIs with significant ownership by such entities. Existing agreements for services to other FPI categories are grandfathered for the agreement period or one year from the circular's date.
Text
Regulation 24 (b) of SEBI (Mutual Funds) Regulations, 1996 pertaining to “Restrictions on business activities of the asset management company” was amended and notified in the Gazette having no. SEBI/LAD-NRO/GN/2019/37 dated September 23, 2019.
AMCs may provide management and advisory services in terms of Regulation 24(b) of MF Regulations to FPIs falling under the following categories: Government and Government related investors; Appropriately regulated entities such as pension funds, insurance or reinsurance entities, banks and mutual funds; Appropriately regulated FPIs wherein (a) or (b) above hold more than 50% of shares/ units.
For agreements entered into by the AMCs on or before the date of this Circular, to provide management and advisory services to such FPIs which are not falling under the above categories, the AMCs may continue to provide the services, for the period as mentioned in the agreement or one year from the date of this Circular, whichever is earlier.
The proviso to clause (vi) of regulation 24(b) of MF Regulations shall be applicable for the categories of FPIs as mentioned under paragraph (i) above.
The aforesaid provisions shall be effective from the date of this circular.
This circular is issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, read with the provisions of regulations 77 of SEBI (Mutual Funds) Regulations, 1996.
Source: SecMarx — Management and advisory services by AMCs to Foreign Portfolio Investors. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.