TMI BlogInvestment by Qualified Foreign Investors (QFI) in Indian equity sharesX X X X Extracts X X X X X X X X Extracts X X X X ..... ll have the same meaning as that provided in para 3.1 of SEBI circular Cir/IMD/DF/14/2011 dated August 09, 2011 .Qualified Foreign Investor (QFI) shall mean a person resident in a country that is compliant with Financial Action Task Force (FATF)standards and that is a signatory to International Organization of Securities Commission's (IOSCO s) Multilateral Memorandum of Understanding (MMOU). Provided that such person is not resident in India, Provided further that such person is not registered with SEBI as Foreign Institutional Investor or Sub-account. Explanation - For the purposes of this clause: (1) the term Person shall carry the same meaning under Section 2(31) of the Income Tax Act, 1961 (2) the phrase resident in India shall carry the same meaning as in the Income Tax Act, 1961 (3) resident in a country, other than India, shall mean resident as per the direct tax laws of that country. 4. To become a qualified Depository Participant (hereinafter referred to as DP ), a SEBI registered DP shall fulfill the following: 4.1. DP shall have paid up capital of ₹ 50 crore or more; 4.2. DP shall be either a clearing bank or clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diligence for each of the joint holders. The DP shall carry necessary due diligence and obtain appropriate declarations and undertakings from QFI to ensure that no other demat account is held by any of the QFI as a QFI or in any other capacity such as NRI, before opening a demat account. 7.2. The DP shall ensure that the same set of ultimate/ end beneficial owner(s) are not allowed to open more than one demat account as QFI. For this purpose, the DP shall carry out necessary due diligence and obtain appropriate declarations and undertakings from QFI. 7.3. A QFI can open trading accounts with one or more SEBI registered stock brokers 7.4. The DP shall ensure that only QFI who meet the conditions stipulated in para 3.1 of SEBI circular Cir/IMD/DF/14/2011 dated August 9, 2011 are allowed to invest in equity shares. Additionally, the DP shall ensure that only those entities are allowed to open demat account as QFI whose ultimate/ end beneficial ownership is not resident in India. The DP shall carry out necessary due diligence for the same at the time of account opening. An express undertaking to this effect shall be obtained by DP from the QFI. 7.5. The entities having opa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls of the overseas bank account designated by the QFI and shall ensure that all inward bound investments are received from that overseas account and repatriation/ remittances of proceeds are also transferred into the same overseas account. 7.14. The DP shall require QFI to submit necessary information for the purpose of obtaining PAN. The DP may use the combined PAN cum KYC form as notified by CBDT for this purpose. Each QFI shall obtain a separate and distinct PAN. The DP may take any additional information/ documents from QFI other than those mentioned in the common PAN cum KYC form to ensure compliance with PML rules and regulations, FATF standards and SEBI circulars issued from time to time. 7.15. The DP shall ensure that all the investor related documents/ records of QFI are available with the DP. 7.16. The DP shall ensure that equity shares held by QFI are free from all encumbrances including pledge or lien etc. at all times. 7.17. The DP shall, at all times, ensure compliance with laws, rules and regulations of the jurisdictions where the QFI are based. 7.18. The DP shall ensure that the interests of other clients of DP are not adversely affected in any manner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipulated by the depositories. 8.5. The stock exchanges shall provide the details of paid up equity capital of all the listed companies, ISIN wise, to the depositories once in six months, periodically and also provide information regarding change in paid up equity capital in any listed company, immediately. 8.6. The QFI and DP shall ensure that the total shareholding held by a QFI 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. 8.7. The depositories shall put in place appropriate systems and procedures to monitor the above limit by using PAN and/ or other unique identity number of the QFI. 8.8. The depositories shall administer and monitor, so as to ensure, that aggregate shareholding of all QFIs shall not exceed ten percent of the paid up equity capital of the company at any point of time, in respect of each equity share class having separate and distinct ISIN. 8.9. The depositories shall jointly publish/ disseminate the ISIN wise and company wise aggregate shareholding of QFIs to public, on daily basis. 8.10. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ten percent for whatsoever reason, the QFI due to whom the limit is breached shall mandatorily divest excess holdings within three working days of such breach being notified by depositories to the DP. The DP shall obtain necessary authorization from the QFI at the time of account opening for such divestment of excess holdings. 8.16. The stock exchanges shall amend Clause 35 of the listing agreement on or before June 30, 2012, so as to incorporate another class of investor to disseminate QFI shareholding in equity shares. 8.17. The stock exchanges shall develop a separate segment for intra QFI transactions in the equity shares of companies in the caution list, if they wish to buy without the prior approval of depositories. However, QFI who have obtained prior approval of the depositories as referred in para 8.11 and 8.12 above, may purchase equity shares in the normal segment of recognized stock exchanges. 8.18. The stock exchanges/ depositories/ DPs shall not levy any charges towards services relating to monitoring and administering of investment limits of QFI. 9. Process flow 9.1. Purchase 9.1.1. The QFI shall place a purchase order with the DP mentionin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin said period, the money shall be remitted by the DPs to the designated bank overseas account of the QFI within five working days from the date of receipt of money in the pooled bank account. 9.3. Dividend and other corporate actions 9.3.1. In case of dividend received on account of QFI, the DP shall remit the same to the designated bank overseas account of the QFI within five working days (including the date of credit to the single rupee pool account) from the date of receipt of money in the DP s rupee pooled bank account, unless any fresh purchase of equity shares is made out of such dividend receipts 9.3.2. In case of QFI participation in corporate actions such as buy back, delisting etc. wherein the pool account maintained with DP is credited with funds, such funds shall be remitted back to the designated bank overseas account of the QFI within five days of receipt of same, unless any fresh purchase of equity shares is made out of such funds. 10. The transactions of QFIs, for all purposes, shall be treated at par with that of Indian non-institutional investors with regard to margins, voting rights, public issues etc. 11. This circular is issued in exercise of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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