On 19-12-2022, the Securities and Exchange Board of India (‘SEBI’) has issued Master Circular for Foreign Portfolio Investors, Designated Depository Participants and Eligible Foreign Investors laying down the operational guidelines under the SEBI (Foreign Portfolio Investors) Regulations, 2019.

Key Points:

  1. SEBI has laid down certain parameters for registration of Foreign Portfolio Investors (‘FPIs’) which are to be checked by the Designated Depository Participants (‘DDPs’) to determine eligibility, while processing an FPI application.

  2. FPIs must provide KYC related documents based on the category under which it is registered only then the supporting documents and the Form will be uploaded by the intermediary on the KYC Registration Agencies (‘KRA’) portal for other market intermediaries to access and complete their KYC requirements.

  3. Further, SEBI has laid down some conditions on the investment limits. In case of multiple FPIs belonging to the same investor group, the investment limits must be clubbed at the investment limit as applicable to a single FPI.

  4. SEBI has also explained the architecture of the System to facilitate the listed Indian companies to ensure compliance with the foreign investment limits.

  5. SEBI has laid down the requirements relating to issuance of Offshore Derivative Instruments (‘ODIs’) and has put restrictions on the FPIs to issue ODIs referencing derivatives. Furthermore, FPI are not allowed to hedge their ODIs with derivative positions on stock exchanges in India.

  6. Guidelines for participation of Eligible Foreign Investors (‘EFI’) in International Financial Services Centre have been formulated specifying that such entities will not be treated as SEBI regulated entities.

  7. The Investor Charter must be published on the website of DDPs for ease of accessibility of investors.

  8. Furthermore, the monthly data on complaints received and redressal thereof also must be published on the website of DDP within 7th succeeding month.

SEBI vide circular dated 5-11-2019 issued guidelines for FPIs, DDPs and EFIs, the provisions of the same has been incorporated in this master circular, superseding the earlier operational guidelines.

Annexure A of this Master Circular contains a list of rescinded circulars. Mostly all the directions/ guidelines are rescinded, excluding some which are still in force-

  1. Any action taken or purported to have been done or taken under the rescinded circulars, prior to such rescission, are deemed to have been taken under the corresponding provisions of this Master Circular.

  2. In case any application is made to the Board under rescinded circular and is still pending, will be deemed to have been made under the corresponding provisions of this circular.

  3. In case of any previous operation of the rescinded circulars (anything suffered, any penalty or violation committed against rescinded circular, any right/ privilege/ obligation/ liability is acquired/ accrued/ incurred) will remain unaffected as if the rescinded circulars have never been rescinded.

*Kriti Kumar, Editorial Assistant has reported this brief.

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