FOREIGN PORTFOLIO INVESTOR

Foreign Portfolio Investor

Invetsmentz offers a technologically advanced platform along with personal service to all its FPI customers. The domain knowledge of our promoter at handling international transactions serves as an easy and convenient entry into Indian markets. Our Portfolio Management service is the best option to any Foreign Investor to take part in the prosperity of the Indian markets. We have done a tie-up with ORBIS custodial service which takes care of all the regulatory requirements on Indian Laws. In the following pages we provide all information in relation to FPI investments in India.

WHO IS A FOREIGN PORTFOLIO INVESTOR?

An FPI means a person who satisfies the prescribed eligibility criteria and has been registered under the SEBI(Foreign Portfolio Investors) Regulations, 2014. All existing Foreign Institutional Investors (FIIs ) and Qualified Foreign Investors (QFIs), holding a valid certification of Registration are deemed to be FPIs, till the expiry of the block of three years for which they have paid fees as per the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995.

Eligibility of FPI

- Should not be a person resident in India

- Should be a resident of a country which is a signatory to bilateral Memorandum of Understanding with SEBI or should be a resident of a country whose securities market regulator is a signatory to International Organisation of Securities Commission’s Multilateral Memorandum of Understanding

- Should not be resident of a country identified in the public statement of Financial Action Task Force ( FATF) as

a) A jurisdiction having a strategic Anti-Money Laundering or Combating the Financing of Terrorism deficiencies to which counter measures apply, or

b) a jurisdiction that has not made sufficient progress in addressing the deficiencies or has not committed to an action plan developed with the FATF to address the deficiencies

- If the applicant is a Bank, it should be resident of a country whose Central Bank is a member of the Bank for International Settlements (BIS)

- Should not be a Non Resident Indian (NRI)

- Should be legally permitted to invest in Securities outside his country

- In case of a corporate, trust, etc (i.e any person which is not an individual) should be authorized by its Memorandum of Association (MOA) & Articles of Association (AoA), or equivalent document

- Should have sufficient experience, good track record, be professionally competent, be financially sound, and generally good reputation of fairness and integrity.

- Should be a fit and proper person based on the criteria specified in Schedule II of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008.

CATEGORIES OF FPI’S:

CATEGORY 1

1. Government and Government related foreign investors such as Foreign Central Banks, Governmental Agencies, Sovereign Wealth Funds and International/ Multilateral Organizations/ Agencies

2. Pension Funds and University Funds

3. Appropriately regulated entities such as insurance or re-insurance entities, banks, asset management companies, investment managers, investment managers, investment advisors, portfolio managers, brokers dealers and swap dealers.

4. Entities form FATF member countries.

5. An entity whose investment is from an FATF member country and registered as a category 1 FPI

CATEGORY 2

1. Appropriately regulated funds not eligible as category 1 FPIs;

2. Endowments and foundations;

3. Charitable organizations;

4. Corporate Bodies;

5. Family offices;

6. Individuals;

7. Appropriately regulated entities investing on behalf of clients, that meet the conditions specified by the SEBI and

8. Unregulated funds in the form of limited partnerships and trusts.

CATEGORY 3

  • All other eligible foreign investors not eligible under Category I and II such as Endowments, Charitable Societies/Trust, Foundations
  • Corporate Bodies
  • Trusts
  • Individuals
  • Family Offices

Broad Based Fund” implies established or incorporated outside India, having at least 20 investors, with no investor holding > 49% shares or units of the fund.

In case of an Institutional Investor holding more than 49%, then this investor must itself be a Broad Based Fund For ascertaining number of investors, both Direct and underlying Investors to be considered.

Only investors of entities set up for the sole purpose of pooling funds and making investments shall be considered for the purpose of determining underlying investors.

REGULATORY REQUIREMENTS

Items Description
SEBI Registration, Fees Mandatory due-diligence and registration to be done by Custodian (DDP)
Custody A/c Mandatory
PAN Number / CA Mandatory to obtain PAN Card, file Tax returns in India
Bank A/c Foreign currency + INR account allowed
Depositary A/c One Depository allowed per Person / Entity
Investments Types
Listed securities only permitted; Infra bonds allowed in unlisted also
    • Equity, Mutual Funds
    • Debt (Government, Corporate)
    • Alternative Investment Funds
Equity, Currency and Interest Rate Derivatives
Investment Limits
  • Investment in the Equity Shares of a Company by a Single FPI or a Group of FPIs shall be < 10% of the Issued Capital of the Company.
  • Government Securities – 6% of outstanding stock
  • Corporate Bonds – 15% of outstanding stock.
  • Separate position limits in the Derivatives
Taxation Standard tax rates for all categories, no TDS
ODI/P-notes Category I may issue, subscribe to or otherwise deal in ODIs
Registration Fees
  • Category 1 – USD 3000
  • Category 2 – USD 300

PROCESS FLOW

Step 1: Apply to a Designated Depository Participant for registration

  • Appoint your DDP/ Custodian
  • Submit Form “A” and KYC Form along with supporting documents to your DDP
  • Register as Foreign Portfolio Investor (FPI)

Step 2: Obtain Tax Registrations

  • Appoint CPA
  • Submit requisite forms and supporting documents

Step 3: Open Bank Accounts in India

  • Open Rupee Bank account with a designated bank
  • Submit requisite forms and supporting documents

Step 4: DDP opens Custody & Depository Accounts; Obtains UCC & CP Code from Exchanges

Step 5: Open Trading Account with your Broker

  • Appoint ACMIIL as Broker
  • Submit requisite forms and supporting documents for Registration
  • For making Investments in India
  • Remitting Funds from Overseas Bank Account to Bank Account opened in India
  • Place Orders with Broker, ACMIIL
#All the formalities regarding Account Opening will be completed by the DDP/custodian

PROCESS FLOW

Step 1: Apply to a Designated Depository Participant for registration

  • Appoint your DDP/ Custodian
  • Submit Form “A” and KYC Form along with supporting documents to your DDP
  • Register as Foreign Portfolio Investor (FPI)

Step 2: Obtain Tax Registrations

  • Appoint CPA
  • Submit requisite forms and supporting documents

Step 3: Open Bank Accounts in India

  • Open Rupee Bank account with a designated bank
  • Submit requisite forms and supporting documents

Step 4: DDP opens Custody & Depository Accounts; Obtains UCC & CP Code from Exchanges

Step 5: Open Trading Account with your Broker

  • Appoint ACMIIL as Broker
  • Submit requisite forms and supporting documents for Registration
  • For making Investments in India
  • Remitting Funds from Overseas Bank Account to Bank Account opened in India
  • Place Orders with Broker, ACMIIL

#All the formalities regarding Account Opening will be completed by the DDP/custodian

KYC REQUIREMENT

Individuals Non – Individuals
Proof of Identity (Passport Constitutive Documents (MoA, Trust Deed, Partnership Deed)
Proof of Address Certificate of Incorporation
Bank Proof Proof of Address
Bank Letter Bank Account Details
PAN One Depository allowed per Person / Entity
  Bank Letter stating satisfactory relationship (Category III only)
  Board Resolution stating that entity is allowed to invest
  Shareholding details and Ultimate Beneficiaries’# Details
  Financials
  Senior Management Credentials / Photo
  Authorized Signatories Details
  PAN
Fatca Form Fatca / CRS Form

INVESTMENT PRODUCTS

EQUITY

  • Shares, Debentures and Warrants, listed or to be listed (both Primary / Secondary)
  • Units of domestic Mutual Fund Schemes, whether listed or not
  • Units of schemes floated by a Collective Investment Scheme
  • Derivatives traded on a recognized Stock Exchange
  • Indian Depository Receipts (IDRs)
  • Other instruments as permitted from time to time

DEBT

  • Dated Government Securities
  • Commercial Papers issued by an Indian Company
  • Rupee denominated Credit Enhanced Bonds
  • Security Receipts issued by Asset Reconstruction Companies
  • Perpetual Debt instruments and debt capital instruments, as specified by RBI from time to time
  • Non-Convertible Debentures / Bonds issued by an Indian Company in the infrastructure Sector
  • Non-Convertible Debentures / Bonds issued by NBFCs categorized as Infrastructure Finance Company’ by RBI
  • Rupee denominated bonds or units issued by Infrastructure Debt Funds
  • Such other instruments specified by SEBI from time to time

DERIVATIVES

  • Equity Futures & Options
  • Interest Rate Futures & Options
  • Currency Futures & Options