Clarifications regarding investment by Foreign Institutional Investors
Summary
This circular amends the SEBI (FII) Regulations, 1995 to permit Foreign Institutional Investors to hold residual securities after registration expiry with specific SEBI permission. It establishes a procedure for FIIs to seek disinvestment rights within 45 days of registration expiry, subject to RBI approval under FEMA. Additionally, it mandates all FIIs to appoint and report details of a compliance officer to SEBI by June 30, 2001.
Text
At the time of expiry of registration, the FII desiring permission for disinvestment shall make a request to SEBI along with details of its holdings as per format in Annexure- A. Such requests shall be submitted within 45 days of expiry of registration.
SEBI would, if appropriate, grant such permission for a period of 6 months under intimation to the Reserve Bank of India (RBI) requesting the latter to grant necessary approval under Foreign Change Management Act at it s end.
The permission would generally permit only sale of the securities held by the FII/SA as on date of expiry of registration. No purchase transactions shall be undertaken after the expiry of registration. However, credit of corporate benefits and application for rights issue in respect of existing securities would be permitted.
Ina case any fresh purchase transactions are undertaken, the FII would be bound to seek fresh registration besides being liable for penal action for making investments without holding valid registration.
FIIs and their custodians shall be responsible for reporting these trades carried out as per the SEBI permission appropriately.
If the FII is unable to sell the seucties within 6 months, it can approach SEBI for extension and be also accompanied by a statement of current holdings in the required format.
All FIIs are requested to provide the same, designation and contact particulars including email did of the compliance officer who would be responsible for compliance with the provisions of the SEBI (FII) Regulations, 1995 and the other relevant provisions.
This information may be submitted by letter, fax or email so as to reach SEBI by June 30, 2001.
Source: SecMarx — Clarifications regarding investment by Foreign Institutional Investors. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.