Foreign Institutional Investors (FIIs)
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Transcript of Foreign Institutional Investors (FIIs)
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FOREIGN INSTITUTIONAL
INVESTORS
One who proposes to invest their proprietary funds oron behalf of "broad based" funds or of foreign
corporates and individuals and belong to any of the
under given categories can be registered for FII:
Pension Funds
Mutual Funds
Investment Trust
Insurance or reinsurance companies
Endowment Funds
University Funds
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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
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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 withunder 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 DivisionSecurities and Exchange Board of India,
224, Mittal Court, 'B' Wing, 1st Floor,
Nariman Point, Mumbai - 400 021.
INDIA.
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SUPPORTING DOCUMENTSREQUIRED
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 forthe last one year, provided that the period covered
shall not be less than twelve months.
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A declaration by the applicant with registration
number and other particulars in support of its
registration or regulation by a Securities Commissionor 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 particulars of the domestic custodian.
A signed declaration statement that appears at theend of the Form.
Declaration regarding fit & proper entity.
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THEELIGIBILITYCRITERIAFORAPPLICANT
SEEKINGFIIREGISTRATION
As per Regulation 6 ofSEBI (FII) Regulations, 1995,
Foreign Institutional Investors are required to fulfill thefollowing conditions to qualify for grant of registration:
Applicant should have track record, professional
competence, financial soundness, experience, generalreputation of fairness and integrity;
The applicant should be regulated by an appropriateforeign regulatory authority in the same
capacity/category where registration is sought fromSEBI. Registration with authorities, which areresponsible for incorporation, is not adequate to qualifyas Foreign Institutional Investor.
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The applicant is required to have the permission
under the provisions of the FEMA 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
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INVESTMENTRESTRICTIONS:
A Foreign Institutional Investor may invest only in thefollowing:-
(a) Securities in the primary and secondary marketsincluding shares, debentures and warrants of companies,listed or to be listed on a recognised stock exchange
in India; and(b) units of schemes floated by domestic mutual funds
including Unit Trust of India, whether listed on arecognised stock exchange or not,
(c) Dated Government Securities;(d) Derivatives traded on a recognised stock exchange;
(e) Commercial paper;
(f) Security receipts.
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Where a foreign institutional investor or sub-account holds equity shares in a company
whose shares are not listed on any recognisedstock exchange, and continues to hold suchshares after initial public offering and listingthereof, such shares shall be subject to lock-in
for the same period, if any, as is applicable toshares held by a foreign direct investor placedin similar position, under the policy of theCentral Government relating to foreign directinvestment for the time being in force.
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APPOINTMENTOFDOMESTICCUSTODIAN:
A Foreign Institutional Investor or a global custodian
acting on behalf of the Foreign Institutional Investor
shall enter into an agreement with a domestic custodian
to act as custodian of securities for the Foreign
Institutional Investor.
The Foreign Institutional Investor shall ensure that the
domestic custodian takes steps for:
(a) Monitoring of investments of the Foreign Institutional
Investor in India;(b) Reporting to the Board on a daily basis the
transactions entered into by the Foreign Institutional
Investor;
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(c) Preservation for five years of records relating to his
activities as a Foreign Institutional Investor; and
(d) Furnishing such information to the Board as may be
called for by the Board with regard to the activities of the
Foreign Institutional Investor and as may be relevant for
the purpose of this regulation.
A Foreign Institutional Investor may appoint more than
one domestic custodian with prior approval of the Board,
but only one custodian may be appointed for a single
sub-account of a Foreign Institutional Investor.
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APPOINTMENTOFDESIGNATED BANK:
A Foreign Institutional Investor shall appoint a branch
of a bank approved by the Reserve Bank of India for
opening of foreign currency denominated accounts and
special non-resident rupee accounts.
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APPOINTMENTOFCOMPLIANCE
OFFICER:
Every Foreign Institutional Investor shall appoint a
compliance officer who shall be responsible
for monitoring the compliance of the Act, rules and
regulations, notifications, guidelines, instructions etcissued by the Board or the Central Government.
The compliance officer shall immediately and
independently report to the Board any non-compliance
observed by him.