Operational Guidelines for Foreign Venture Capital Investors (FVCIs) and Designated Depository Participants (DDPs)
Summary
This circular amends the SEBI (Foreign Venture Capital Investors) Regulations, 2000, with new provisions effective January 1, 2025. It mandates existing FVCIs to engage Designated Depository Participants for due diligence and registration continuity by March 31, 2025. The document outlines operational guidelines for eligibility checks, including country and fit-and-proper assessments, conducted by DDPs. This section outlines the procedures for the continuance and renewal of FVCI registration, including fee payments and timelines. It details the consequences of failing to pay renewal fees, such as late fees and mandatory liquidation of investments. Additionally, it establishes protocols for handling rejected applications, reporting requirements, name changes, surrender of registration, and changes in Depositary Participant or material information. This section outlines the procedures for reporting material changes, including Type II changes and delays in intimation. It details the regulatory response to changes in compliant jurisdiction status or sanctions lists affecting FVCIs. Additionally, it establishes Know Your Client (KYC) documentation requirements, sharing protocols with ba
Text
SEBI (Foreign Venture Capital Investors) Regulations, 2000 were amended vide notification dated September 05, 2024. The said amendments shall come into force with effect from January 01, 2025.
The provisions of this circular shall come into force with effect from January 01, 2025.
This Circular is issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 read with Regulations 3, 8, 9, 10, and 15 of FVCI Regulations.
Existing FVCIs shall engage a DDP, to avail its services for conducting due-diligence with respect to continuance of registration as an FVCI, by March 31, 2025.
Any FVCI failing to engage a DDP by March 31, 2025, shall not be permitted to make any further investment and shall liquidate investments in listed securities by March 31, 2026 and other investments by March 31, 2027.
Post liquidation of investments within the said time-period, the FVCI shall apply for surrender of its registration within 30 days.
The DDP engaged by the existing FVCI shall carry out registration related due diligence and assess compliance of the FVCI with eligibility criteria, within 6 months from the date of such engagement.
Existing FVCI failing to meet the eligibility criteria shall not be permitted to take fresh commitments or make new investments.
Restriction on new investments shall not apply to any additional investments in its existing unlisted investee company(ies). However, such FVCI shall be permitted to hold or sell its existing investments.
Existing FVCI with nil holdings/investments which fails to meet the eligibility criteria shall apply for surrender of its registration to its DPP within 30 days of such assessment by DDP.
In case the FVCI itself or its underlying investors... come under the Sanctions List notified by the United Nations Security Council, or the FVCI is no longer a ‘fit and proper’ person... no transaction (buy or sell) shall be permitted in the account of such FVCI.
The respective DDP shall as soon as possible but not later than seven days notify such instances to SEBI.
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Source: SecMarx — Operational Guidelines for Foreign Venture Capital Investors (FVCIs) and Designated Depository Participants (DDPs). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.