NOTICE
CSE/Notices/SEBI/2012/082
June 19,
2012
Re: Revision in framework for Qualified Foreign Investor (QFI) investment in Equity Shares and Mutual Fund schemes
Trading Members of the Exchange are hereby informed that the Exchange has received a Circular from SEBI vide Ref. No.CIR/IMD/FII&C/13/2012,dated June 07, 2012 regarding Revision in framework for Qualified Foreign Investor (QFI) investment in Equity Shares and Mutual Fund schemes. The contents of the said Circular is reproduced hereunder for information of the Trading Members.
Quote: -
CIRCULAR
CIR/ IMD/ FII&C/
13/ 2012 June 07, 2012
All SEBI registered
Intermediaries/ Recognized Stock Exchanges/ Depositories/ Mutual Fund/
qualified Depository Participants (DP)
Sir / Madam,
Sub: Revision in
framework for Qualified Foreign Investor (QFI) investment in Equity Shares and
Mutual Fund schemes
Vide SEBI circulars Cir/IMD/DF/14/2011 and Cir/IMD/FII&C/3/2012
dated August 09, 2011 and January
13, 2012, respectively, Qualified Foreign Investors (QFI) were allowed
to invest in schemes of Indian mutual funds and Indian equity shares subject to
terms and conditions mentioned therein. Subsequently, vide SEBI circular CIR/IMD/FII&C/4/2012 dated January 25, 2012, the eligibility criteria for a
qualified DP was revised.
2. On a review and in
consultation with the Government of India (GoI) and RBI, it has been
decided to revise the definition of QFI as under:
QFI shall mean a
person who fulfils the following criteria:
(i) Resident in a
country that is a member of Financial Action Task Force (FATF) or a member
of a group which is a member of FATF; and
(ii) Resident in a
country that is a signatory to IOSCO’s MMOU (Appendix A
Signatories) or a signatory of a bilateral MOU with SEBI:
Provided that the
person is not resident in a country listed in the public statements issued by
FATF from time to time on-(i) jurisdictions having a strategic Anti-Money
Laundering/Combating the Financing of Terrorism (AML/CFT) deficiencies
to which counter measures apply, (ii) jurisdictions that have not made
sufficient progress in addressing the deficiencies or have not committed to an
action plan developed with the FATF to address the deficiencies:
Provided further such
person is not resident in India:
Provided further that
such person is not registered with SEBI as Foreign Institutional Investor or
Sub-account or Foreign Venture Capital Investor.
Explanation.-For the purposes of this clause:
(1)The term
"Person" shall carry the same meaning under Foreign Exchange
Management Act (FEMA), 1999 and section 2(31) of the Income Tax
Act, 1961; (2) The phrase “resident in
India” shall carry the same meaning as in the FEMA 1999, and 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) “Bilateral MoU
with SEBI” shall mean a bilateral MoU between SEBI and the overseas regulator
that inter alia provides for information sharing arrangements.(5) Member
of FATF shall not mean an Associate member of FATF.
The definition of
QFI, as provided in the circulars Cir/IMD/DF/14/2011
and Cir/IMD/FII&C/3/2012 dated August 09, 2011 and January 13, 2012, respectively,
stands amended as above.
3. The word
“Purchase” used in clause 6.1.4 of circular Cir/IMD/FII&C/3/2012 dated
January 13, 2012 shall be substituted with the word “Subscription”.
4. Between clauses
8.6 and 8.7 of Circular dated January 13, 2012, clause 8.6.1 is inserted to
read as under
: “8.6.1. In case
a person invests in the same company through both QFI route and FDI route, the
aggregate holding of the person in such company 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. This shall be subject to guidelines on FDI as prescribed by GoI
and RBI from time to time .”
5. It has been
decided to allow QFIs to make fresh purchases of eligible securities, out of
the sale/ redemption/ dividend proceeds of any of the eligible securities.
Further, it is clarified that all the eligible securities shall be held in a
single demat account of the QFI. Eligible securities shall mean mutual fund
units (under both direct and indirect route), equity shares, corporate debt and
any other security which is permitted for investment by QFI from time to time
by GoI, RBI and SEBI.
Clause 4.7.7 of
circular Cir/IMD/DF/14/2011 dated August 09, 2011 and Clause 9.2.2 of
circular Cir/IMD/FII&C/3/2012 dated January 13, 2012 stand amended,
accordingly.
6. It has been
further decided to extend the option of appointment of custodian of securities
by the QFI. The QFI, if it so desires, may appoint a custodian of securities,
who would be obligated to perform clearing and settlement of securities on
behalf of the QFI client. However, no person shall be appointed as custodian by
the QFI unless it is itself the qualified DP of the QFI and is also registered
as custodian with SEBI under SEBI (Custodian of Securities) Regulations, 1996.
7. A QFI shall open a
single non-interest bearing Rupee Account with an AD Category- I bank in India,
for routing the receipt and payment for transactions relating to purchase and
sale of eligible securities subject to the conditions as may be prescribed by
RBI from time to time. Accordingly, it is clarified that henceforth there is no
more requirement for opening and maintenance of a single rupee pool bank
account by the qualified DP. QFIs, shall, henceforth invest in all eligible
securities through this single non- interest bearing Rupee Account.
Circulars dated August
9, 2011, January 13, 2012, and January 25, 2012 respectively, stand amended as
above. This circular is issued in exercise of powers conferred under Section 11
(1) of the Securities and Exchange Board of India Act, 1992, to protect the
interests of investors in securities and to promote the development of, and to
regulate the securities market.
Yours faithfully,
S MADHUSUDHANAN
Deputy General
Manager
Tel No.:
022-26449614
Email: smadhu@sebi.gov.in
Unquote: -
Trading
Members are requested to take note of the aforesaid SEBI guideline.
M.A.V. Raju
Deputy General Manager