One who propse to invest their
proprietary funds or on behalf of "broad based" funds or of
foreign corporates and individuals and belong to any of the undergiven
categories can be registered for FII.
- Pension Funds
- Mutual Funds
- Investment Trust
- Insurance or reinsurance companies
- Endowment Funds
- University Funds
- Foundations or Charitable Trusts or Charitable Societies who
propose to invest on their own behalf, and
- Asset Management Companies
- Nominee Companies
- Institutional Portfolio Managers
- Trustees
- Power of Attorney Holders
- Bank
An application for registration has to be made in Form A, the format of
which is provided in the SEBI(FII) Regulations, 1995 and submitted with
under mentioned documents in duplicate addressed to SEBI as well as to
Reserve Bank of India (RBI) and sent to the following address within 10
to 12 days of receipt of application.
Address for application
The Division Chief
FII Division
Securities and Exchange Board of India,
224, Mittal Court, 'B' Wing, 1st Floor,
Nariman Point, Mumbai - 400 021.
INDIA.
Supporting documents required are
- Application in Form A duly signed by the authorised signatory of
the applicant.
- Certified copy of the relevant clauses or articles of the
Memorandum and Articles of Association or the agreement authorizing
the applicant to invest on behalf of its clients
- Audited financial statements and annual reports for the last one
year , provided that the period covered shall not be less than
twelve months.
- A declaration by the applicant with registration number and other
particulars in support of its registration or regulation by a
Securities Commission or Self Regulatory Organisation or any other
appropriate regulatory authority with whom the applicant is
registered in its home country.
- A declaration by the applicant that it has entered into a
custodian agreement with a domestic custodian together with
particulatrs of the domestic custodian.
- A signed declaration statement that appears at the end of the
Form.
- Declaration regarding fit & proper entity.
The eligibility criteria for applicant seeking FII
registration
As per Regulation 6 of SEBI (FII) Regulations,1995, Foreign
Institutional Investors are required to fulfill the following conditions
to qualify for grant of registration:
- Applicant should have track record, professional competence,
financial soundness, experience, general reputation of fairness and
integrity;
- The applicant should be regulated by an appropriate foreign
regulatory authority in the same capacity/category where
registration is sought from SEBI. Registration with authorities,
which are responsible for incorporation, is not adequate to qualify
as Foreign Institutional Investor.
- The applicant is required to have the permission under the
provisions of the Foreign Exchange Management Act, 1999 from the
Reserve Bank of India.
- Applicant must be legally permitted to invest in securities
outside the country or its in-corporation / establishment.
- The applicant must be a "fit and proper" person.
- The applicant has to appoint a local custodian and enter into an
agreement with the custodian. Besides it also has to appoint a
designated bank to route its transactions.
- Payment of registration fee of US $ 5,000.00
FAQs on Foreign Institutional Investor
What is the procedure for registration
of sub-account?
Annexure B of the Regulations duly filled and signed by the FII and
Sub-Account has to be submitted by FII on behalf of the proposed
sub-account. With if DD of US$ 1000 favouring "Securities and
Exchange Board of India" as fees is to be submitted payable at New
York.
Is it that all sub-accounts need to be
broad-based?
No. Proprietary, Foreign corporates and foreign individuals need not be
broad-based.
What is the duration required to
register sub-accounts?
For registered Foreign Institutional Investor, it takes 3 working days
from the date of receipt of complete application and fees.
In which name should the securities be
registered?
The Foreign Institutional Investor has the choice to register the
securities in the following names:
- In the name of the Foreign Institutional Investor if the FII is
investing on its own behalf.
- In the name of the sub-account if the FII is investing on behalf
of the sub-account
- In the name of the Foreign Institutional Investor a/c sub-account
if the FII is investing on behalf of the sub-account
What is the procedure if the Foreign
Institutional Investor/ sub account changes its name?
For registered Foreign Institutional Investor, it has to inform SEBI
promptly with the relevant documents supporting the name change. The
relevant documents are :
- Request for change in name by the Foreign Institutional Investor
mentioning reasons for name change of the FII and/or sub account.
- Certificate from the Registrar of Companies, and/or approval from
home regulator.
- Original Registration Certificate issued by SEBI to the Foreign
Institutional Investor.
SEBI will issue a no-objection letter in this regard after recording
the request of name change. The information regarding name change should
be submitted immediately after the change has taken place in the home
country and the requisite approval from the home regulator (if needed)
has to been taken.
What is the procedure for transferring a
sub-account from one registered Foreign Institutional Investor to
another?
If a registered sub-account wishes to transfer from one registered
Foreign Institutional Investor to another, then the FII to whom it is
proposed to be transferred has to request SEBI with the following
documentation.
- A declaration that it is authorised to invest on behalf of the
sub-account.
- A no-objection letter for the transfer of the sub-account from
the transferor FII.
What is the procedure for change of
local custodian?
In case of change of the local custodian of the FII / sub-account, the
change should be intimated to SEBI by the FII. On receipt of no
objection from the existing custodian and acceptance from the proposed
custodian, the change of custodian would be approved - by SEBI.
What is the procedure for registration
as FII/sub account under 100% debt route?
The procedure for registration of FII/sub account under 100% debt route
is similar to that of normal funds besides a clear statement by the
applicant that it wishes to be registered as FII/sub account under 100%
debt route. However, Government of India allocates the overall
investment limit for 100% debt funds annually. The grant of investment
limit for individual 100% debt funds is within this overall limit. The
funds have to seek further investment limit in case the limit allotted
to them is exhausted and they wish to invest further.
Can a Foreign Institutional Investor
having an existing account with one custodian open an account with other
custodian for its sub- accounts?
Yes. A Foreign Institutional Investor having an account with one
custodian can open accounts with different custodians for its different
sub-accounts. However, one sub-account cannot be custodied with more
than one custodian.
What is the procedure if an existing
sub-account wants to get registered as a Foreign Institutional Investor?
In case if a registered sub-account wishes to get itself registered as
a Foreign Institutional Investor, then it will have to apply in Form A
to SEBI for the same and has to satisfy all the eligibility criteria
norms mentioned in SEBI (Foreign Institutional Investor) Regulations,
1995. It should also submit a letter from the old FII indicating its
'No-objection' to such registration.
In case of merger or takeover, in case
if the registered Foreign Institutional Investor loses its existence,
then can the SEBI FII registration be transferred to the surviving
entity?
No. SEBI FII Registration is not transferable. The surviving entity has
to obtain fresh registration as an FII from SEBI.
What are the investment limits for FII/
sub-accounts?
The sub-account which is not a foreign individual/ corporate can
individually invest upto 10%. The limit for each foreign corporate/
individual is 5%. These limits are within the overall limit of 24% / 49%
or the sectoral caps as the case may be.
Who all are included under the
definition of foreign individual?
Foreign individuals mean all foreign residents other than NRI and
Overseas Corporate Bodies.
On what basis is the FII investment
limit calculated?
Investment limit by all registered FIIs or sub accounts in primary or
secondary markets under Portfolio Investment Scheme is subject to a
ceiling of 24% of issued share capital of a company. The limit can be
extended upto 49% per sectoral cap if the general body of the company
approves it.
What is the validity period of
sub-account registration?
The registration of the sub-account is concurrent with its registered
FII and the registration of the sub-account expires with the expiry of
registration of the FII. Moreover, if the registration of the FII is
suspended/cancelled, the registration of its sub-account is also
suspended/ cancelled as the case may be.
Can an FII/sub-account trade after its
registration has expired?
No. if it is not interested in renewal but has certain residual assets,
it should apply for disinvestment in terms of Circular No.
FITTC/CUST/12/2001 dated June 04, 2001 and abide by the guidelines
specified in this regard.
Can protected cell companies/cells
incorporated in Mauritius be registered as FIIs/sub-accounts?
No.
Can FII/sub-accounts trade in
derivatives ?
Yes subject to operational guidelines as specified by SEBI/RBI/various
regulatory authorities from time to time.
What is the procedure for renewal of
FII/sub-account registration ?
They has to apply before 3 months of the expiry of registration in Form
A. Circular No FITTC/CUST/09/2000 dated September 21, 2000 may be
referred.
