TMI BlogSecurities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019X X X X Extracts X X X X X X X X Extracts X X X X ..... Portfolio Investors) Regulations, 2019. (2) They shall come into force on the date of their publication in the Official Gazette. Definitions. 2. (1) In these regulations, unless the context otherwise requires, the terms defined herein shall bear the meanings assigned to them below, and their cognate expressions and variations shall be construed accordingly,- (a) Act means the Securities and Exchange Board of India Act, 1992 ; (b) appropriately regulated entity means an entity which is regulated by the securities market regulator or the banking regulator of home jurisdiction or otherwise, in the same capacity in which it proposes to make investments in India; (c) Bilateral Memorandum of Understanding with the Board shall mean a bilateral Memorandum of Understanding between the Board and any authority outside India that provides for information sharing arrangement as specified under clause (ib) of sub-section (2) of Section 11 of the Act; (d) Board means the Securities and Exchange Board of India established under section 3 of the Act; (e) certificate means a certificate of registration granted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock exchange under the Securities Contracts (Regulation) Act, 1956. (2) Words and expressions used and not defined in these regulations, but defined in the Act or the Foreign Exchange Management Act, 1999, the Companies Act, 2013, the Securities Contracts (Regulation) Act, 1956, the Depositories Act, 1996 or the rules and regulations made thereunder shall have the same meaning respectively assigned to them in those Acts or rules or regulations or any statutory modification or re-enactment thereto. CHAPTER II REGISTRATION OF FOREIGN PORTFOLIO INVESTORS Application for grant of certificate as a foreign portfolio investor. 3. (1) No person shall buy, sell or otherwise deal in securities as a foreign portfolio investor unless it has obtained a certificate granted by a designated depository participant on behalf of the Board. Explanation An offshore fund floated by an asset management company that has received no-objection certificate in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, shall be required to obtain registration as a foreign portfolio investor, for investment in se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t made sufficient progress in addressing the deficiencies or has not committed to an action plan developed with the Financial Action Task Force to address the deficiencies; (g) the applicant is a fit and proper person based on the criteria specified in Schedule II of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008; (h) any other criteria specified by the Board from time to time: Provided that clause (a), (d) and (e) shall not apply to an applicant incorporated or established in an International Financial Services Centre. Categories of foreign portfolio investor. 5. An applicant seeking registration as a foreign portfolio investor may apply in one of the categories mentioned hereunder or any other category as may be specified by the Board from time to time (a) Category I foreign portfolio investor which shall include (i) Government and Government related investors such as central banks, sovereign wealth funds, international or multilateral organizations or agencies including entities controlled or at least 75% directly or indirectly owned by such Government and Government related inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry participant may require the applicant to furnish such further information or clarification as may be considered necessary for the grant of the certificate of registration as a foreign portfolio investor. (2) The applicant or his authorised representative shall, if so required by the Board or the designated depository participant, appear before them for personal representation in connection with the grant of a certificate. Certificate of registration 7.(1) The designated depository participant shall on behalf of the Board grant the certificate of registration, bearing registration number generated by National Securities Depositories Limited, as specified in the First Schedule to an applicant if it is satisfied that the applicant is eligible and fulfils the requirements as specified in these regulations. (2) The designated depository participant shall endeavour to dispose of the application for grant of certificate of registration as soon as possible but not later than thirty days after receipt of application by the designated depository participant, or after the information called for under regulation 6 has been furnished; whichever is later. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied fees. (4) The Board shall, as soon as possible, after considering the submissions made in the application seeking reconsideration made under sub-regulation (3) and after giving a reasonable opportunity of being heard, communicate its decision in writing to the applicant. Suspension, cancellation or surrender of certificate. 9. (1) Subject to the compliance with the provisions of the Act, these regulations and the circulars issued thereunder, the registration granted by the designated depository participant on behalf of the Board under these regulations shall be permanent unless suspended or cancelled by the Board or surrendered by the foreign portfolio investor. (2) The suspension and cancellation of the certificate of registration granted by the Board under these regulations, shall be dealt with in the manner as provided in Chapter V of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008. (3) When the foreign portfolio investor fails to pay the required fees for continuance of registration within the specified due date and such foreign portfolio investor does not have any cash or security or derivative po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal presence, either through its branches or through agency relationships with overseas intermediaries regulated in their respective home jurisdictions; (e) the applicant has systems and procedures to comply with the requirements of the Financial Action Task Force Standards, Prevention of Money Laundering Act, 2002, Rules prescribed thereunder and the circulars issued from time to time by the Board; (f) the applicant is a fit and proper person based on the criteria specified in Schedule II of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008; and (g) any other criteria as may be specified by the Board from time to time. (2) Notwithstanding anything contained in sub-regulation (1) of this regulation, the Board may consider an application from an entity, regulated in India or in its home jurisdiction, for grant of approval to act as designated depository participant, upon being satisfied that the applicant has sufficient experience in providing custodial services and that the grant of such approval is in the interest of the development of the securities market: Provided that such entity shall be registered with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may, within a period of thirty days from the date of receipt of communication under sub-regulation (2), apply to the Board for reconsideration of its decision. (4) The Board shall, as soon as possible, in light of the submissions made in the application for reconsideration made under sub-regulation (3) and after giving a reasonable opportunity of being heard, convey its decision in writing to the applicant. Validity of approval. 16. Subject to the compliance with the provisions of the Act, these regulations and the circulars issued thereunder, the approval granted by the Board under these regulations shall be permanent unless suspended or withdrawn by the Board or surrendered by the designated depository participant. Suspension or withdrawal of approval. 17. Where any designated depository participant who has been granted approval under these regulations- (a) fails to comply with any conditions subject to which an approval has been granted to him under these regulations, or (b) contravenes any of the provisions of the securities laws or directions, instructions or circulars issued thereunder; the Board may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such shares after the initial public offering and listing thereof, such shares shall be subject to lock-in for the same period, if any, as is applicable to shares held by a foreign direct investor placed in similar position, under the policy of the Government of India relating to foreign direct investment for the time being in force. (3) Nothing contained in sub-regulation (2) shall be deemed to prejudice the applicability of any other law, regulation or guideline. (4) In respect of investments in the secondary market, the following additional conditions shall apply (a) A foreign portfolio investor shall transact in the securities in India only on the basis of taking and giving delivery of securities purchased or sold; (b) Nothing contained in clause (a) shall apply to (i) any transactions in derivatives on a recognized stock exchange; (ii) short selling transactions in accordance with the framework specified by the Board; (iii) any transaction in securities pursuant to an agreement entered into with the merchant banker in the process of market making or subscribing to unsubscribed portion of the issue in accordanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a merger or demerger approved in accordance with the provisions of the Companies Act, 2013 as well as the applicable guidelines issued by the Board or pursuant to implementation of any resolution plan approved under the Insolvency and Bankruptcy Code, 2016 or in accordance with the guidelines issued by the Government of India or the Reserve Bank of India or any other regulator for a scheme of debt resolution: Provided that such unlisted holdings of the foreign portfolio investor shall be treated as Foreign Direct Investment; (xi) transactions for transfer of right entitlements; (xii) purchase or sale transactions of illiquid or suspended or delisted securities by a foreign portfolio investor; Explanation Illiquid securities shall mean those securities that are not frequently traded in terms of Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018; (xiii) transactions between registered foreign portfolio investors, who are multi investment manager structure of the same beneficial owner and have common Permanent Account Number; and (xiv) any other transaction as may be specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (8) An entity, registered as a foreign portfolio investor shall be permitted to invest in Indian securities as a person resident outside India in accordance with provisions of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 made under the Foreign Exchange Management Act, 1999. (9) In cases where the Government of India enters into agreements or treaties with other sovereign Governments and where such agreements or treaties specifically recognize certain entities to be distinct and separate, the Board may, during the validity of such agreements or treaties, recognize them as such, subject to conditions as may be specified by it. (10) A foreign portfolio investor may lend or borrow securities in accordance with the framework specified by the Board in this regard. (11) The investment by the foreign portfolio investor shall also be subject to such other conditions and restrictions as may be specified by the Government of India from time to time. Conditions for issuance of offshore derivative instruments. 21. (1) No foreign portfolio investor may issue, subscribe to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... culars issued thereunder and any other terms and conditions specified by the Board from time to time; (b) forthwith inform the Board and designated depository participant in writing, if any information or particulars previously submitted to the Board or designated depository participant are found to be false or misleading, in any material respect; (c) forthwith inform the Board and designated depository participant in writing, if there is any material change in the information including any direct or indirect change in its structure or ownership or control, previously furnished by him to the Board or designated depository participant; (d) as and when required by the Board or any other Government agency in India, submit any information, record or documents in relation to its activities as a foreign portfolio investor; (e) forthwith inform the Board and the designated depository participant, in case of any penalty, pending litigation or proceedings, findings of inspections or investigations for which action may have been taken or is in the process of being taken by an overseas regulator against it; (f) obtain a Permanent Account Number fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... procedure specified by the Board and the foreign portfolio investor and its investor group shall not make further portfolio investment in that company under these regulations. (4) Notwithstanding anything contained in sub-regulation (3), the clubbing of investment limit of foreign portfolio investors having common control shall not be applicable where (a) foreign portfolio investors are appropriately regulated public retail funds; or (b) the foreign portfolio investors are public retail funds where the majority is owned by appropriately regulated public retail fund on look through basis; or (c) foreign portfolio investors are public retail funds and investment managers of such foreign portfolio investors are appropriately regulated. Explanation - Public retail funds means - (i) mutual funds or unit trusts which are open for subscription to retail investors and which do not have specific investor type requirements like accredited investors; (ii) insurance companies where segregated portfolio with one to one correlation with a single investor is not maintained; and (iii) pension funds. (5) In case of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery foreign portfolio investor shall appoint a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications, guidelines and instructions issued by the designated depository participant or the Board or the Central Government: Provided that in case of a foreign portfolio investor who is an individual, such individual shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications, guidelines and instructions issued by the designated depository participant or the Board or the Central Government. (2) The compliance officer shall immediately and independently report any non-compliance observed by him to the Board and the designated depository participant. Investment advice in publicly accessible media. 28. (1) A foreign portfolio investor, or any of its employees shall not render directly or indirectly any investment advice about any security in the publicly accessible media, whether real-time or otherwise, unless a disclosure of its interest including long or short position in the said security has been made, while rendering such advice. (2) I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gn portfolio investors are allowed to invest in securities market; (f) have adequate systems to ensure that in case of jointly held depository accounts, each of the joint holders meet the requirements specified for foreign portfolio investors and shall perform KYC due diligence for each of the joint holders; (g) in case of any penalty, pending litigation or proceedings, findings of inspections or investigations for which action may have been taken or is in the process of being taken by any regulator against a designated depository participant, the designated depository participant shall bring such information forthwith, to the attention of the Board, depositories and stock exchanges; (h) be guided by the relevant circular on Anti-Money Laundering or Combating the Financing of Terrorism specified by the Board from time to time. (2) The designated depository participant engaged by an applicant seeking registration as foreign portfolio investor shall (a) ascertain at the time of granting registration and whenever applicable, whether the applicant forms part of any investor group; (b) open a dematerialized account for the applican ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and documents. 32. (1) Every designated depository participant shall maintain the relevant true and fair records, books of accounts, and documents including the physical or electronic records relating to registration of foreign portfolio investors. (2) The designated depository participant shall intimate to the Board in writing the location where such books, records and documents shall be maintained. (3) Subject to the provisions of any other law for the time being in force, every designated depository participant shall preserve the books of accounts, physical or electronic records and documents specified in this regulation at all times. Appointment of compliance officer. 33. (1) Every designated depository participant shall appoint a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations, notifications, guidelines and instructions issued by the Board or the Central Government. (2) The compliance officer shall immediately and independently report any non-compliance observed by him to the Board. Information to the Board or the Reserve Bank of India. 34. E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rities market or in the interest of investors. Notice before inspection. 37. (1) Before undertaking an inspection under regulation 36, the Board shall give not less than ten days notice to the designated depository participants: Provided that where the Board is satisfied that, in the interest of the investors, no such notice should be given, it may, by an order in writing direct that such inspection be taken up without such notice. (2) During the course of an inspection, the designated depository participants against whom the inspection is being carried out shall be bound to discharge its obligation as provided in regulation 38. Obligations of designated depository participants in connection with inspection by the Board. 38. (1) It shall be the duty of the designated depository participants whose affairs are being inspected, and of every director, officer and employee thereof to produce to the inspecting officer such books, securities, accounts, records and other documents in its custody or control and furnish him with such statements and information relating to its activities, as the inspecting officer may require, within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to recover from the designated depository participants or applicant, as the case may be, such expenses including the fees paid to the auditors as may be incurred by it for the purposes of inspecting or investigating the books of account, records, documents, infrastructures, systems and procedures or affairs of the designated depository participants or applicant, as the case may be. CHAPTER VIII PROCEDURE FOR ACTION IN CASE OF DEFAULT Liability for action in case of default. 43. A foreign portfolio investor, designated depository participant, depository or any other person who contravenes any of the provisions of these regulations shall be liable for action under the Securities and Exchange Board of India (Intermediaries) Regulations, 2008 or the relevant provisions of the Act or the Depositories Act, 1996 and the regulations made thereunder. CHAPTER IX MISCELLANEOUS Power of the Board to issue clarifications. 44. In order to remove any difficulties in the application or interpretation of the provisions of these regulations, the Board may issue clarifications and guidelines in the form of circulars o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ANGE BOARD OF INDIA (FOREIGN PORTFOLIO INVESTORS) REGULATIONS, 2019 [See regulation 7(1)] CERTIFICATE OF REGISTRATION I. In exercise of the powers conferred by sub-section (1A) of section 12 of the Securities and Exchange Board of India Act, 1992 (the Act ), read with the regulations made thereunder the Board hereby grants a certificate of registration to _________________________________ as a foreign portfolio investor, subject to the conditions specified in the Act and in the regulations made thereunder. II. The category and sub-category of the foreign portfolio investor is _______and __________respectively. III. The registration number for the foreign portfolio investor is /.../.../.../.... IV. The address of the foreign portfolio investor is __________________. V. This certificate shall be valid till it is suspended, cancelled or surrendered in accordance with the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2019. Date: Place: By Order Signature Name and Designation of the Authorised Signatory of Designated d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Exchange Board of India payable at Mumbai, at the time of grant of prior approval by the Board. PART C COLLECTION OF REGULATORY FEES BY FOREIGN PORTFOLIO INVESTOR FROM ODI SUBSCRIBERS [See sub-regulation (4) of Regulation 21] Regulatory Fee (1) A foreign portfolio investor shall collect the regulatory fee of US $ 1000 or any other amount, as may be specified by the Board from time to time, from every subscriber of offshore derivative instrument issued by it and deposit the same with the Board by way of electronic transfer in the designated bank account of the Board. (2) The regulatory fee shall be deposited once every three years beginning April 1, 2017. THIRD SCHEDULE SECURITIES AND EXCHANGE BOARD OF INDIA (FOREIGN PORTFOLIO INVESTORS) REGULATIONS, 2019 CODE OF CONDUCT [See regulation 23] 1. A foreign portfolio investor and its key personnel shall observe high standards of integrity, fairness and professionalism in all dealings in the Indian securities market with intermediaries, regulatory and other government authorities. 2. A foreign portfoli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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