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INDIA: New Criteria for Verifying Foreign Portfolio Beneficiaries Introduced

Under new criteria adopted by the Securities and Exchange Board of India (SEBI), the Beneficial Owners (BOs) of Foreign Portfolio Investors (FPI) will be deemed to be individuals owning a 25% stake (or more) in a limited company or an individual holding a 15% (or more) stake in a trust or partnership.

In the case of category II or III FPIs as defined below, the relevant entities are required to provide the SEBI with a list of their BOs, along with the personal details of each such stakeholder, including name, address, tax residency jurisdiction and percentage of shares held, before 10 October this year.

Type of Foreign Investors:

Category I

  • Government and government-associated, foreign investors, such as foreign central banks, governmental agencies, sovereign wealth funds, and international / multilateral organisations / agencies.

Category II

  • Appropriately-regulated broad-based funds, such as mutual funds, Investment trusts, insurance / reinsurance companies and other broad-based funds.
  • Appropriately-regulated entities, such as banks, asset management companies, investment managers / advisors and portfolio managers.
  • Broad-based funds where the investment manager is appropriately-regulated.
  • University funds and pension funds.
  • University-related endowments already registered with SEBI as FII / sub account.

Category III

  • All other eligible foreign investors investing in India under the Portfolio Investment Scheme (PIS) route not covered by Category I or II, such as endowments, charitable societies / trusts, foundations, corporate bodies, trusts, individuals and family offices.
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