FPIs prohibited from executing Non-Disposal Undertakings

On March 14, 2018, SEBI issued an informal guidance to UBS AG (“Applicant”), a SEBI registered FPI, clarifying the position on whether non-disposal undertakings (“NDU’s”) constitute an ‘encumbrance’ under the SEBI (Foreign Portfolio Investors) Regulations, 2014 (“FPI Regulations”). Regulation 32(2)(d) of the FPI Regulations imposes an obligation on the designated depository participant engaged by an…

SEBI tightens norms applicable to issuance of Offshore Derivative Instruments

Foreign Portfolio Investors registered under the SEBI (FPI) Regulations, 2014, are permitted to issue offshore derivative instruments (ODIs) and participatory notes (P-Notes) to overseas investors who seek to invest in the Indian securities market without registering as an FPI. While the issuance of ODIs is governed by stringent norms within regulation 22 of the FPI…

FPIs and Offshore Derivative Instruments

Until now only certain categories of FPIs under the SEBI (FPI) Regulations, 2014, were permitted to subscribe to, or otherwise deal in, offshore derivative instruments if, the counterparty in such transactions was regulated by an appropriate foreign regulatory authority. However, the meaning of the phrase ‘regulated by an appropriate foreign regulatory authority’ was ambiguous. Although…

Foreign Portfolio Investors (FPIs) under the Chandrashekhar Committee Report

In an attempt to further simplify the foreign investment regulatory regime in India, the K B Chandrasekhar Committee has, inter alia, suggested the clubbing of Foreign Institutional Investors (FIIs), subaccounts and Qualified Financial Investors (QFIs) into a single investor class called “Foreign Portfolio Investors” (FPIs). The Non-Resident Indian (NRI) and the Foreign Venture Capital Investor…

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