Participation by Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs) and Resident Indian (RI) individuals in SEBI registered FPIs based in International Financial Services Centres in India
Summary
This circular amends the FPI Master Circular to allow up to 100% aggregate contribution by NRIs, OCIs, and RI individuals in IFSC-based FPIs. It introduces specific conditions regarding declarations, documentation, and diversification requirements for such entities. The holding threshold for these FPIs is reduced from 50% to 33%, and the changes take immediate effect.
Text
SEBI (Foreign Portfolio Investors) Second Amendment Regulations, 2024 provide flexibility of having up to hundred percent aggregate contribution by NRIs, OCIs and RI individuals in the corpus of FPIs based in International Financial Services Centres (“IFSCs”) in India and regulated by International Financial Services Centres Authority (“IFSCA”).
At the time of seeking registration, the applicant shall submit a declaration stating its intent to have aggregate contribution, of NRIs, OCIs and RI individuals, of fifty per cent or more in its corpus, to its DDP.
The applicant shall provide to its DDP, copies of PAN card of all their NRI/OCI/RI individual constituents, along with the economic interest of such NRIs/OCIs/RI individuals in its corpus.
In case of non-individual constituents of such FPIs, which are controlled directly or indirectly by one or more NRIs/OCIs/RI individuals, or where NRI/OCI/RI Individuals together hold 50% or more ownership or economic interest on a full look through basis, the FPI shall provide the PAN or suitable declaration and identity document as specified under clause (ii) above.
Contribution of all investors of the FPI are required, by law, to be pooled into one investment vehicle at IFSC that takes registration as an FPI with SEBI, with no side-vehicles.
The corpus of the FPI is a blind pool (i.e. common portfolio) with no segregated portfolios, by law. All investors in the FPI have pari-passu and pro-rata rights in the FPI.
At every point of time, up to a maximum of 20% of the corpus of the FPI can be invested in the equity shares of an Indian listed entity.
The investors in the FPI are diversified at every point of time with the FPI having a minimum of 20 investors with each investor contributing not more than 25% to the corpus of the FPI.
No investor has a say in the investment decisions of the FPI. By law, the Investment Manager / Fund Manager of the FPI is completely independent with respect to taking investment decisions for the FPI.
The above requirements shall be fulfilled by the FPI irrespective of the actual aggregate contribution of NRIs/OCIs/RI individuals in the corpus of the FPI.
Provided that in case of an FPI to which provisions of sub-clause (ii) of clause (c) of Regulation 4 of the FPI Regulations, 2019 are not applicable, the holding threshold shall be 33% instead of 50%.
Sub-paras 17(i)(a) and 17(i)(b) of Part A shall be modified to refer to breach of prescribed limits for contribution/control by NRIs/OCIs/RIs in the corpus of the FPI.
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Source: SecMarx — Participation by Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs) and Resident Indian (RI) individuals in SEBI registered FPIs based in International Financial Services Centres in India. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.