Revision in framework for Qualified Foreign Investor (QFI) investment in Equity Shares and Mutual Fund schemes
Summary
This SEBI circular revises the definition of Qualified Foreign Investors (QFI) to include residency in FATF or IOSCO signatory countries while excluding those from high-risk jurisdictions. It introduces a five percent aggregate holding limit for persons investing through both QFI and FDI routes in the same company. The document also mandates a single non-interest bearing Rupee Account for transactions and allows fresh purchases using proceeds from eligible securities.
Text
QFI shall mean a person who fulfils the following criteria: (i) Resident in a country that is a member of Financial Action Task Force (FATF)...; and (ii) Resident in a country that is a signatory to IOSCO’s MMOU... Provided that the person is not resident in a country listed in the public statements issued by FATF... Provided further such person is not resident in India: Provided further that such person is not registered with SEBI as Foreign Institutional Investor...
The word “Purchase” used in clause 6.1.4 of circular Cir/IMD/FII&C/3/2012 dated January 13, 2012 shall be substituted with the word “Subscription”.
In case a person invests in the same company through both QFI route and FDI route, the aggregate holding of the person in such company shall not exceed five percent of paid up equity capital of the company at any point of time. This investment limit shall be applicable to each class of equity shares having separate and distinct ISIN. This shall be subject to guidelines on FDI as prescribed by GoI and RBI from time to time .
It has been decided to allow QFIs to make fresh purchases of eligible securities, out of the sale/ redemption/ dividend proceeds of any of the eligible securities. Further, it is clarified that all the eligible securities shall be held in a single demat account of the QFI.
The QFI, if it so desires, may appoint a custodian of securities, who would be obligated to perform clearing and settlement of securities on behalf of the QFI client. However, no person shall be appointed as custodian by the QFI unless it is itself the qualified DP of the QFI and is also registered as custodian with SEBI under SEBI (Custodian of Securities) Regulations, 1996.
A QFI shall open a single non-interest bearing Rupee Account with an AD Category- I bank in India, for routing the receipt and payment for transactions relating to purchase and sale of eligible securities subject to the conditions as may be prescribed by RBI from time to time.
Source: SecMarx — Revision in framework for Qualified Foreign Investor (QFI) investment in Equity Shares and Mutual Fund schemes. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.