SEBI on Friday, 12th June, 2015 issued a clarificatory circular on registration of Foreign Venture Capital Investors (FVCI) as Foreign Portfolio Investors (FPI), as clarity on the same was sought by Designated Depository Participants (DDP).
SEBI clarified that as per the SEBI (Foreign Portfolio Investors) Regulations, 2014 & SEBI (Foreign Venture Capital Investors) Regulations, 2000 there is no express prohibition on the same.
SEBI further said that as the Investment conditions & restrictions for entity registered under FVCI & FPI are different, it is required that such an entity has a clear segregation of funds/ securities which are proposed to be invested / held under the respective registrations.
Further to the above SEBI laid down certain conditions which must be considered by the DDPs before granting registration to FVCI as FPI. The same are reproduced here under:
- The applicant complies with the eligibility criteria as prescribed under the FPI Regulations.
- The funds raised, allocated and invested must be clearly segregated for both the registrations.
- Separate accounts must be maintained with the custodian for execution of trades. However, such an applicant shall have same custodian for its activities as FPI and FVCI.
- The securities held under FVCI and FPI registrations should be clearly segregated.
- Reporting of transactions must be done separately according to the conditions applicable under the specific registration.
- All the conditions applicable to the entity under the respective registrations must be complied with at the level of the segregated funds and activities with respect to the specific registrations.
- The investment restrictions as applicable to FPI, in terms of Regulation 21 of FPI Regulations and SEBI Circular No. CIR/IMD/FIIC/20/2014 dated November 24, 2014 shall be applicable.
- The applicant does not have opaque structure(s), as defined under Explanation 1 of Regulation 32(1) (f) of FPI Regulations.
The said circular can be accessed at the SEBI website by clicking on the following link: SEBI Circular No. CIR/IMD/FIIC/05/2015 dated 12th June, 2015