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THE GAZETTE OF INDIA PART II - SECTION 3 - SUB-SECTION
(ii) SECURITIES AND EXCHANGE BOARD OF INDIA NOTIFICATION Bombay 14th November 1995 SECURITIES
AND EXCHANGE BOARD OF INDIA THE GAZETTE OF INDIA PART – II SECURITIES AND EXCHANGE BOARD OF INDIA NOTIFICATION Mumbai, 20th October, 2000 SECURITIES
AND EXCHANGE BOARD OF INDIA THE
GAZETTE OF INDIA
PART II – SECTION 3 – SUB-SECTION (ii)
SECURITIES AND EXCHANGE BOARD OF INDIA
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THE GAZETTE OF INDIA PART II - SECTION 3 - SUB-SECTION
(ii) SECURITIES AND EXCHANGE BOARD OF INDIA NOTIFICATION BOMBAY 14th NOVEMBER 1995 SECURITIES
AND EXCHANGE BOARD OF INDIA SEBI/LE/918(E) In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) the Board hereby, makes the following regulations, namely:-
[AS AMENDED UPTO 03/01/2000] |
SECURITIES AND EXCHANGE BOARD OF INDIA
NOTIFICATION
BOMBAY 14th NOVEMBER 1995
SECURITIES
AND EXCHANGE BOARD OF INDIA
(FOREIGN INSTITUTIONAL INVESTORS)
REGULATIONS, 1995
SEBI/LE/918(E) In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) the Board hereby, makes the following regulations, namely:-
Short title and commencement
1.(1) These regulations may be called the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995.
(2) They shall come into force on the date of their publication in the Official Gazette.
Definitions
2. In these regulations, unless the context otherwise requires, -
(a) "Act" means the Securities and Exchange
Board of India Act, 1992 (15 of 1992);
(b) "certificate" means a certificate of registration granted by the
Board under these regulations;
(c) "designated bank" means any bank in India, which has been
authorised by the Reserve Bank of India to act as a banker to Foreign
Institutional Investors;
(d) "domestic custodian" includes any person carrying on the activity
of providing custodial services in respect of securities;
(e) "enquiry officer" means any officer of the Board, or any other
person appointed by the Board under Chapter V of these regulations;
(f) "Foreign Institutional Investor" means an institution established
or incorporated outside India which proposes to make investment in India in
securities;
(g) "form" means a form specified in the First Schedule to these
regulations;
(h) "Government of India Guidelines" means the guidelines dated
September 14, 1992 issued by the Government of India for Foreign Institutional
Investors, as amended from time to time;
(i) "institution" includes every artificial juridical person;
(j) "schedule" means a schedule to these regulations;
(k) "sub-account" includes those institutions, established or
incorporated outside India and those funds, or portfolios, established outside
India, whether incorporated or not, on whose behalf investments are proposed to
be made in India by a Foreign Institutional Investor.
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REGISTRATION OF FOREIGN INSTITUTIONAL INVESTOR
Application for certificate
3.(1) No person shall buy, sell or otherwise deal in securities as a Foreign Institutional Investor unless he holds a certificate granted by the Board under these regulations.
(2) An application for the grant of certificate shall be made to the Board in Form A.
(3) Notwithstanding anything contained in sub-regulation (2), any Foreign Institutional Investor who has made an application for the grant of a certificate to the Board prior to the commencement of these regulations shall be deemed to have made an application under sub-regulation (2) and the application shall be accordingly dealt with under these regulations.
(4) Notwithstanding anything contained hereinabove, any person who has before the commencement of these regulations, made an application for registration and has been granted registration by the Board under the Government of India Guidelines to act as a Foreign Institutional Investor shall be deemed to have made an application under sub-regulation (2) above may continue to buy, sell or otherwise deal in securities subject to the provisions of these regulations, till the grant or refusal of a certificate under these regulations.
Furnishing of information, clarification, and personal representation.
4. (1) The Board may require the applicant to furnish such further information or clarification as the Board considers necessary regarding matters relevant to the activities of the applicant for grant of certificate.
(2) The applicant or his authorised representative shall, if so required by the Board, appear before the Board for personal representation in connection with the grant of a certificate.
Application to conform to the requirements
5. Subject to the provisions of sub-regulation (3) and sub- regulation (4) of regulation 3, any application, which is not complete in all respects and does not conform to the instructions specified in the form or is false or misleading in any material particular, shall be rejected by the Board:
Provided that, before rejecting any such application, the applicant shall be given a reasonable opportunity to remove, within the time specified by the Board, such objections as may be indicated by the Board.
Consideration of application
6. For the purpose of the grant of certificate the Board shall take into account all matters which are relevant to the grant of a certificate and in particular the following, namely:-
(a) the applicant's track record, professional competence, financial soundness, experience, general reputation of fairness and integrity;
(b) whether the applicant is regulated by an appropriate foreign regulatory authority;
(c) whether the applicant has been granted permission under the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 1973) by the Reserve Bank of India for making investments in India as a Foreign Institutional Investor;
(d) whether the applicant is -
(i) an institution established or incorporated outside India as Pension Fund or Mutual Fund or Investment Trust; or
(ii) an Asset Management Company or Nominee Company or Bank or Institutional Portfolio Manager, established or incorporated outside India and proposing to make investments in India on behalf of broad based funds[ and its proprietary funds, if any ] ; or
(iii) a Trustee or a Power of Attorney holder, incorporated or established outside India, and proposing to make investments in India on behalf of broad based funds [ and its proprietary funds, if any ]; or
[ (iv) university fund,
endowments, foundations or charitable trusts or charitable societies.
Provided that while considering the application from applicants under clause
(iv) the Board may take into account the following namely :-
Explanation: For the purposes of this regulation, "broad based fund"
means a fund, established or incorporated outside India, which has at least
[twenty] investors, with no single individual investor holding more than [ten]
per cent of the shares or units of the fund.
Provided that if the broad based fund has institutional investor(s) it shall not be necessary for the fund to have [twenty] investors:
Provided further that if the broad based fund has an institutional investor who holds more than [ten] percent of the shares or units in the fund, then the institutional investor must itself be a broad based fund; or
(e) whether the grant of certificate to the applicant is in the interest of the development of the securities market.
[ (f) whether the applicant is a fit and proper person. ]
Procedure and grant of certificate
7. Where an application is made for grant of certificate under these regulations, the Board shall, as soon as possible but not later than three months after information called for by it is furnished, if satisfied that the application is complete in all respects, all particulars sought have been furnished and the applicant is found to be eligible for the grant of certificate, grant a certificate in Form B , subject to payment of fees in accordance with the Second Schedule:
[Provided that the Board may exempt from the payment of fees, an applicant such as the World Bank and other institutions established outside India for providing aid, and which have been granted privileges and immunities from the payment of tax and duties by the Central Government :
Provided further that the Board shall refund the fees already collected from the institutions which are exempted from the payment of fees by the proviso mentioned above. ]
Validity of certificate
8. The certificate and each renewal thereof shall be valid for a period of five years from the date of its grant or renewal, as the case may be.
Application for renewal of certificate
9. (1) Three months before the expiry of the period of certificate, the Foreign Institutional Investor, if he so desires, may make an application for renewal in Form A .
(2) The application for renewal under sub-regulation (1) shall, as far as may be, be dealt with in the same manner as if it were an application made under sub-regulation (2) of regulation 3 for grant of a certificate.
(3) The Board shall, on such application, if satisfied that the applicant fulfils the requirements specified in regulation 6, grant a certificate in Form B , subject to payment of fees in accordance with the Second Schedule.
Conditions for grant or renewal of certificate to foreign institutional investors
10. The grant or renewal of certificate to the Foreign Institutional Investor shall be subject to the following conditions namely:
(a) he shall abide by the provisions of these regulations;
(b) if any information or particulars previously submitted to the Board are found to be false or misleading, in any material respect, he shall forthwith inform the Board in writing;
(c) if there is any material change in the information previously furnished by him to the Board, which has a bearing on the certificate granted by the Board, he shall forthwith inform the Board;
(d) he shall appoint a domestic custodian and before making any investments in India, enter into an agreement with the domestic custodian providing for custodial services in respect of securities;
(e) he shall, before making any investments in India, enter into an arrangement with a designated bank for the purpose of operating a special non-resident rupee or foreign currency account;
(f) before making any investments in India on behalf of a sub-account, if any, he shall obtain registration of such sub-account, under these regulations.
Procedure where certificate is not granted
11. (1) Where an application for grant or renewal of a certificate does not satisfy the requirements specified in regulation 6, the Board may reject the application after giving the applicant a reasonable opportunity of being heard.
(2) The decision to reject the application shall be communicated by the Board to the applicant in writing stating therein the grounds on which the application has been rejected.
(3) The applicant, who is aggrieved by the decision of the Board under sub-regulation (1) may, within a period of thirty days from the date of receipt of communication under sub- regulation (2), apply to the Board for reconsideration of its decision.
(4) The Board shall, as soon as possible, in the light of the submissions made in the application for reconsideration made under sub-regulation (3) and after giving a reasonable opportunity of being heard, convey its decision in writing to the applicant.
Application for registration of sub- accounts
12.(1) A Foreign Institutional Investor shall seek from the Board registration of each sub- account on whose behalf he proposes to make investments in India.
(2) Notwithstanding any thing contained in sub regulation (1) above, any sub-account which has been granted approval prior to the commencement of these regulations by the Board shall be deemed to have been granted registration as a sub-account by the Board under these regulation.
(3) An application for registration as a sub-account shall contain particulars specified in [ para 1 of Annexure B to form A of the first Schedule. ]
Procedure and grant of registration of sub- accounts
13.(1) For the purpose of grant of registration the Board shall take into account all matters which are relevant to the grant of such registration to the sub-account and in particular the following, namely-
(a) the applicant is an institution or fund or portfolio established or incorporated outside India and proposes to make investment in India;
(b) the applicant is a broad based fund [or proprietary fund ];
[ (bb) the applicant is a fit and proper person. ]
(c) the Foreign Institutional Investor through whom the application for registration is made to the Board holds a certificate of registration as Foreign Institutional Investor; and
(d) the Foreign Institutional Investor through whom an application for registration of sub-account is made, is authorised to invest on behalf of the sub-account.
[ (e) The Foreign Institutional Investor through whom the application for registration is made, has submitted undertakings that the sub-account fulfils the criteria referred to in this sub-regulation in a manner specified in para 2 of Annexure B to Form A of the First Schedule.
(f) The sub-account has paid registration fees in accordance with second schedule. ]
[ (2) The Board on receipt of the undertakings and the registration fees as
referred to in sub-regulation (1), may grant registration to the sub-account.]
(3) A sub-account granted registration in accordance with sub-regulation (2) of this regulation shall be deemed to be registered as a Foreign Institutional Investor with the Securities and Exchange Board of India for the limited purpose of availing of the benefits available to Foreign Institutional Investors under section 115 AD of Income Tax Act, 1961. (43 of 1961).
1Inserted by Securities and Exchange Board of India (Foreign
Institutional Investors) Amendment Regulations, 1997 vide Notification
no.S.O.105(E) dated 12.2.97.
2 Ibid
3 Inserted by Securities and Exchange Board of India (Foreign
Institutional Investors) Amendment Regulations, 1996 vide Notification
no.S.O.702(E) dated 9.10.96.
4 Substituted for "fifty" by Securities and Exchange Board
of India (Foreign Institutional Investors) Amendment Regulations, 1999.
5 Substituted for "five" by Securities and Exchange Board
of India (Foreign Institutional Investors) Amendment Regulations, 1999.
6Substituted for “fifty” by Securities and Exchange Board of India
(Foreign Institutional Investors) Amendment Regulations, 1999.
7Substituted for “five” by Securities and Exchange Board of India
(Foreign Institutional Investors) Amendment Regulations, 1999.
8Inserted by Securities and Exchange Board of India (Foreign
Institutional Investors) Amendment regulations, 1997 by notification no.S .O.
823(E) dated 5.12.97
9Inserted by Securities and Exchange Board of India (Foreign
Institutional Investors) Amendment Regulations, 1996 vide notification
no.S.O.702(E) dated 9.10.96.
10 Substituted for “sub-para (b) of Para 5 of Form A” by
Securities and Exchange Board of India (Foreign Institutional Investors)
Regulations, 1998 vide notification no.S.O.545(E) dated 30.6.98.
11 Inserted by Securities and Exchange Board of India (Foreign
Institutional Investors) Amendment Regulations, 1997 vide Notification
no.S.O.105(E) dated 12.2.97.
12 Inserted by Securities and Exchange Board of India (Foreign
Institutional Investors) Amendment Regulations, 1997 vide Notification
no.S.O.823(E) dated 5.12.97.
13 Inserted by Securities and Exchange Board of India (Foreign
Institutional Investors) Amendment Regulations, 1998 vide notification
no.S.O.545(E) dated 30.6.98.
14 Substituted for “the Board on being satisfied that the
applicant is eligible for a grant of registration shall grant registration to
the sub-account.” by Securities and Exchange Board of India (Foreign
Institutional Investors) Amendment Regulations, 1998 vide notification
no.S.O.545(E) dated 30.6.98.
FORM A
( regulation 3 )
SECURITIES
AND EXCHANGE BOARD OF INDIA
(FOREIGN INSTITUTIONAL INVESTORS)
REGULATIONS, 1995
APPLICATION FORM FOR GRANT OF CERTIFICATE OF REGISTRATION
AS FOREIGN INSTITUTIONAL INVESTOR
WITH THE SECURITIES ANDEXCHANGE BOARD OF INDIA
SECURITIES AND EXCHANGE BOARD OF
INDIA
Mittal Court `B' Wing, 1st Floor
Nariman Point, Bombay - 400 021, INDIA
1. Name, address, telephone no., telex no. and fax no. of the applicant. In case the applicant already has an office in India, the particulars may also be given for that office.
2. Please indicate whether the applicant belongs to any one or more of the following categories :
Pension Fund, Mutual Fund, Investment Trust, Asset Management Company, Bank, Nominee Company and Incorporated / Institutional Portfolio Manager or their Power of Attorney holder (providing discretionary and non- discretionary portfolio management services).
3. a) The date and place of incorporation of the applicant.
b) Brief description of the principal activities of the applicant and the year of commencement of such activities.
c) Brief description of the group, if any, to which the applicant belongs.
4. Name, address, telephone, telex and fax numbers of the Securities Commission / Self Regulatory Organisation /the relevant statutory authority for the securities market or any other appropriate regulatory authority with whom the applicant is registered or by whom the applicant is regulated in the country where the applicant is incorporated or in the countries of its operations, and the registration number and period of registration.
Please also state whether there has been any instance of violation or non-adherence to the securities laws, code of ethics/conduct, code of business rules, for which the applicant, or its parent/ holding company or affiliate may have been subjected to economic, or criminal liability or suspended from carrying out its operations, or the registration has been revoked, temporarily or permanently.
5. a) Please indicate the names of the clients on whose behalf you propose to invest in India.
[ b) please provide additional information and undertakings, in respect of each client for which sub-account registration is being sought, as specified in Annexure B to this form.]
[In case the applicant is itself a Fund the information in regard to 5(b) may be provided regarding the Fund].
6. Please indicate the manner in which you propose to conduct your investments in India i.e. whether through an establishment in India or through any other office outside India. Please give details, and also the name of the contact person/compliance officer.
7. Name and address of the designated bank branch in India through whom investment is proposed to be made.
8. a) Name, address, telephone no., telex no., and fax no. of the domestic custodian. Please also present the background information on the custodian, including volume of business handled, organisational infrastructure and the number of investment companies for which the domestic custodian is acting, or has acted, as custodian.
b) Particulars of the agreement entered into with the domestic custodian.
ANNEXURE
Documents to be enclosed with the application :
a) Copies of Memorandum and Articles of Association and Investment Management Agreements or any other agreements authorising the applicant to invest on behalf of its clients.
b) Audited financial statements and annual reports for the last 5 years.
c) Documents to support registration or regulation by a Securities Commission and / or Self Regulatory Organisation, or any other appropriate regulatory authority.
d) Copy of the Custodian Agreement with the domestic custodian.
e) Declaration Statement (to be given as below).
We hereby agree and declare that the information supplied in the application, including the attachment sheets, is complete and true.
AND we further agree that we will immediately notify the Securities and Exchange Board of India and the Reserve Bank of India of any change in the information provided in the application.
We further agree that we shall comply with the provisions of the Act, and regulations issued thereunder and all other relevant laws including guidelines issued by the Reserve Bank of India and the Government of India.
We further agree that as a condition of grant of certificate of registration, we shall abide by such operational instructions/ directives as may be issued by Securities and Exchange Board of India under the provisions of the Act and by the Reserve Bank of India from time to time.
For and on behalf of_____________________________________
( Name of the applicant )
Authorised Signatory ________________ ____________________________
( Name ) (Signature)
Date :
Place :
Note:
1. Securities and Exchange Board of India (SEBI) and Reserve Bank of India (RBI) reserve the right to call for any further information from the applicant regarding his application.
2. Applications, superscribed "Application for Registration of Foreign Institutional Investor", should be submitted in duplicate, in sealed envelopes, at Securities and Exchange Board of India's office.
31Substituted for “please provide the following
details regarding the clients:
(i) Date and place of incorporation and constitution of the client (i.e.
partnership firm, private company, public company, pension fund, mutual fund,
investment trust etc.)
(ii) Whether the client is a holding or subsidiary company or any other
company.
(iii) Whether the client is registered with any regulatory agency; if so, the
name and address of the regulatory agency, registration number and date of
registration.
(iv) Objectives and principal activities of the clients (investment / fund
management, finance company, investment company, mutual fund, pension fund
etc.)
(v) Number and types of share holders of the client (i.e. individuals institutions
etc.) - percentage distribution of assets between groups of shareholders may
also be provided, along with details of the number of beneficiaries on whose
behalf the institutional shareholders of the client are investing.
(vi) Volume of assets of the client’’;
by Securities and Exchange Board of India (Foreign Institutional
Investors) Regulations, 1998 vide notification no.S.O.545(E) dated 30.6.98.
FORM B
( regulation 7 )
SECURITIES AND EXCHANGE BOARD OF INDIA
(FOREIGN INSTITUTIONAL INVESTORS) REGULATIONS, 1995
CERTIFICATE OF REGISTRATION
I. In exercise of the powers conferred by sub-section (1A) of section 12 of the Securities and Exchange Board of India Act, 1992, read with the regulations made thereunder the Board hereby grants a certificate of registration to as a Foreign Institutional Investor, subject to the conditions specified in the Act and in the regulations made thereunder.
II. Registration Number for the Foreign Institutional Investor is IN/.../.../.../....
III. Unless renewed, the certificate of registration is valid from .......
to .....
Date :
By Order
for and on behalf of
Securities and Exchange Board of India
Authorised Signatory
Place : Bombay
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[ ANNEXURE B
[See Regulation 12(3), 13(1) (e) and para 5(b) of Form A]
Additional information and undertakings to be provided in respect of each client for which sub-account registration is sought, in terms of sub-regulation (1) of regulation 13 of the Securities and Exchange Board of India (Foreign Institutional Investors) 1995 :
1. Sub-account to provide the following details :
Authorised Signatory of sub-account ________________
_____________/ client
(Name of sub-account) (Signature)
Forwarded by FII ________________ _____________
(Name of FII) (Signature)
2. Please provide the following undertakings by the FII in respect of the client / sub-account:
"We undertake that the proprietary funds of ____________ (give name of the foreign institutional investor) shall not be invested through the client / sub-account."
OR
In case the client / sub-account is a proprietary fund of the Foreign Institutional Investor, please provide the following further undertaking :
"We undertake that only the proprietary funds of the ______________ (give name of the Foreign Institutional Investor shall be invested through the client / sub-account."
We hereby agree and declare that the information provided and the undertakings given above are complete and true. And we further agree that we will immediately notify the Securities and Exchange Board of India and the Reserve Bank of India of any change in the information provided.
Authorised Signatory of FII _________________ _______________)
(Name of FII) (Signature)
33 Inserted by the Securities and Exchange Board of India (Foreign
Institutional Investors) Amendment Regulations, 1998 vide notification no. S.O.
545 (E) dated 30.6.98.
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INVESTMENT CONDITIONS AND RESTRICTIONS
Commencement of investment
14. A Foreign Institutional Investor shall not make any investments in securities in India without complying with the provisions of this Chapter.
Investment restrictions
15.(1) A Foreign Institutional Investor may invest only in the following:-
(a) securities in the primary and secondary markets including shares, debentures and warrants of companies [ unlisted ] listed or to be listed on a recognised stock exchange in India; (b) units of schemes floated by domestic mutual funds including Unit Trust of India, whether listed on a recognised stock exchange or not [ (c) dated Government securities] and [ (d) derivatives traded on a recognised stock exchange.]
(2) Notwithstanding anything contained in sub-regulation (1) of this regulation, the total investments in equity and equity related instruments (including fully convertible debentures, convertible portion of partially convertible debentures and tradeable warrants) made by a Foreign Institutional Investor in India, whether on his own account or on account of his sub- accounts, shall not be less than seventy per cent of the aggregate of all the investments of the Foreign Institutional Investor in India, made on his own account and on account of his sub-accounts.
[ Provided that nothing contained in sub-regulation (2) shall apply to any investment of the foreign institutional investor either on its own account or on behalf of its sub-accounts in debt securities which are [unlisted or ] listed or to be listed on any stock exchange if the prior approval of the Board has been obtained for such investments."
Provided further that the Board may while granting approval for the investments impose conditions as are necessary with respect to the maximum amount which can be invested in the debt securities by the foreign institutional investor on its own account or through its sub-accounts. ]
[ Explanation : For the purposes of the provisos to this sub-regulation, the expression "debt securities" shall include dated Government securities [ and treasury bills.] ]
(3) In respect of investments in the secondary market, the following additional conditions shall apply:-
(a) the Foreign Institutional Investor shall transact business only on the basis of taking and giving deliveries of securities bought and sold and shall not engage in short selling in securities;
[ Provided that nothing contained in clause (a) shall apply in respect of transactions in derivatives traded on a recognised stock exchange.]
(b) no transactions on the stock exchange shall be
carried forward;
(c) the transaction of business in securities shall be only through stock
brokers who has been granted a certificate by the Board under sub-section (1)
of section 12 of the Securities and Exchange Board of India Act, 1992;
[ Providedthat transactions in government securities [ including treasury bills ] shall be carried out in a manner specified by the Reserve Bank of India. ]
[Provided further that nothing contained in clause (c) shall apply to sale of securities by a Foreign Institutional investor in response to a letter of offer sent by an acquirer in accordance with the Securities and Exchange Board of India(Substantial Acquisition of Shares and Takeovers) Regulations, 1997.)
[ Provided further that in case of an offer by a company to buy back its securities, the foreign institutional investor, may sell the securities held by it to such company, in accordance with Securities and Exchange Board of India(Buy-back of securities) Regulations, 1998.)
[ (d) a Foreign institutional Investor or a sub-account having an aggregate of securities which are worth rupees ten crore or more, as on the latest balance sheet date, shall, subject to such instructions as may be issued from time to time by the Board, settle their transactions entered on or after January 15, 1998, only through dematerialised securities. ]
(4) Unless otherwise approved by the Board, securities shall be registered -
(a) in the name of the Foreign Institutional Investor, provided the Foreign Institutional Investor is making investments on his own behalf; or
(b) in his name on account of his sub-account, or in the name of the sub-account, in case he is investing on behalf of the sub-account:
Provided that the names of the sub-accounts on whose behalf the Foreign Institutional Investor is investing are disclosed to the Board by the Foreign Institutional Investor.
(5) The purchase of equity shares of each company by a Foreign Institutional Investor investing on his own account shall not exceed [ ten ] percent of the total issued capital of that company.
(6) In respect of a Foreign Institutional Investor investing in equity shares of a company on behalf of his sub-accounts, the investment on behalf of each such sub-account shall not exceed [ ten ] percent of the total issued capital of that company.
(7) The investment by the Foreign Institutional Investor shall also be subject to Government of India Guidelines.
[ (8) A foreign Institutional Investor or sub-account may lend securities through an approved intermediary in accordance with the stock lending scheme of the Board.]
15Inserted by Securities and Exchange Board of India (Foreign
Institutional Investors) Amendment Regulations, 1996 vide notification
no.S.O.702(E) dated 9.10.96.
16 Inserted by Securities and Exchange Board of India (Foreign
Institutional Investors) Amendment Regulations, 1998 vide notification
no.S.O.333(E) dated 20.4.98.
17Inserted by Securities and Exchange Board of India (Foreign
Institutional Investors) Amendment Regulations, 1998 vide notification
no.S.O.545(E) dated 30.6.98.
18 Inserted by Securities and Exchange Board of India (Foreign
Institutional Investors) Amendment Regulations, 1996 vide notification
no.S.O.799(E) dated 19.11.96.
19 Inserted by Securities and Exchange Board of India (Foreign
Institutional Investors) Amendment Regulations, 1998 vide notification
no.S.O.545(E) dated 30.6.98.
20Inserted by Securities and Exchange Board of India (Foreign
Institutional Investors) Amendment Regulations, 1997 vide notification
no.S.O.105(E) dated 12.2.97.
21Inserted by Securities and Exchange Board of India (Foreign
Institutional Investors) Amendment Regulations, 1998 vide notification
no.S.O.417(E) dated 18.5.98.
22Inserted by Securities and Exchange Board of India (Foreign
Institutional Investors) Amendment Regulations, 1998 vide notification
no.S.O.545(E) dated 30.6.98.
23Inserted by Securities and Exchange Board of India (Foreign
Institutional Investors) Amendment Regulations, 1997 vide notification
no.S.O.495(E) dated 10.7.97.
24Inserted by Securities and Exchange Board of India (Foreign
Institutional Investors) Amendment Regulations, 1998 vide notification
no.S.O.417(E) dated 18.5.98.
25Inserted by Securities and Exchange Board of India (Foreign
Institutional Investors) Amendment Regulations, 1998 vide notification
no.S.O.545(E) dated 30.6.98.
26Inserted by Securities and Exchange Board of India (Foreign
Institutional Investors) Amendment Regulations, 1999 vide notification
no.S.O.263(E) dated 16.4.99.
27Inserted by Securities and Exchange Board of India (Foreign
Institutional Investors) Amendment Regulations, 1997 vide notification
no.S.O.823(E) dated 5.12.97.
28Substituted for the word "five" by Securities and
Exchange Board of India (Foreign Institutional Investors) Amendment
Regulations, 1996 vide notification no.S.O.702(E) dated 9.10.96.
29Ibid
30Inserted by Securities and Exchange Board of India (Foreign
Institutional Investors) Amendment Regulations, 1998 vide notification
no.S.O.333(E) dated 20.4.98.
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GENERAL OBLIGATIONS AND RESPONSIBILITIES Appointment of domestic custodian16. (1) 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. (2) 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;
(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. (3) 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. Appointment of designated bank17. 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. Maintenance of proper books of accounts, records, etc. 18. (1) Every Foreign Institutional Investor shall keep or maintain, as the case may be, the following books of accounts, records and documents, namely: (a) true and fair accounts relating to remittance of initial corpus for buying, selling and realising capital gains of investment made from the corpus; (b) accounts of remittances to India for investments in India and realising capital gains on investments made from such remittances; (c) bank statement of accounts; (d) contract notes relating to purchase and sale of securities; and (e) communication from and to the domestic custodian regarding investments in securities. (2) The Foreign Institutional Investor shall intimate to the Board in writing the place where such books, records and documents will be kept or maintained. Preservation of books of accounts, records, etc.19. Subject to the provisions of any other law, for the time being in force, every Foreign Institutional Investor shall preserve the books of accounts, records and documents specified in regulation 18 for a minimum Information to the Board period of five years.20. Every Foreign Institutional Investor shall, as and when required by the Board or the Reserve Bank of India, submit to the Board or the Reserve Bank of India, as the case may be, any information, record or documents in relation to his activities as a Foreign Institutional Investor as the Board or as the Reserve Bank of India may require. [TOP] |
PROCEDURE FOR ACTION IN CASE OF DEFAULT
Cancellation or suspension of certificate
21. (1) A Foreign Institutional Investor who -
(a) fails to comply with any condition subject to which certificate has been granted; or
(b) contravenes any of the provisions of the Act or these regulations, shall be liable to the penalty of-
(i) suspension of certificate for
a specified period; or
(ii) cancellation of certificate, after an enquiry as provided for in these
regulations has been held.
(2) The provisions of these regulations shall be without prejudice to those of regulation 22 and regulation 23 .
Suspension of certificate
22. A penalty of suspension of certificate of a Foreign Institutional Investor may be imposed if he -
(a) indulges in fraudulent transactions in securities;
(b) fails to furnish any information related to his transaction in securities as required by the Board or the Reserve Bank of India;
(c) furnishes false information to the Board; or
(d) does not co-operate in any enquiry conducted by the Board.
Cancellation of certificate
23. A penalty of cancellation of certificate of a Foreign Institutional Investor may be imposed if he -
(a) indulges in deliberate manipulation or price rigging or cornering activities prejudicially affecting the securities market or the investors' interest;
(b) is guilty of fraud or a criminal offence, involving moral turpitude;
(c) does not meet the eligibility criteria laid down in these regulations;
(d) violates the provisions of the Securities and Exchange Board of India (Insider Trading) Regulations, 1992 or of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Markets) Regulations, 1995, made under the Act; or
(e) is guilty of repeated defaults of the nature mentioned in regulation 22 .
Explanation:
In this regulation, "fraud" shall have the same meaning as is assigned to it in section 17 of the Indian Contract Act, 1872.
Manner of making order of suspension and cancellation of certificate
24. No order of penalty of suspension or cancellation of certificate shall be imposed on the Foreign Institutional Investor except after holding an enquiry in accordance with the procedure specified in regulations 25 and regulation 26 .
Manner of holding enquiry
25.(1) For the purpose of holding the enquiry referred to in regulation 24 , the Board may appoint an enquiry officer.
(2) The enquiry officer shall issue to the Foreign Institutional Investor a notice at the principal place of business of the Foreign Institutional Investor setting out the default alleged to have been committed by the Foreign Institutional Investor and calling upon him to show cause why the penalties specified in regulation 21 should not be imposed on him.
(3) The Foreign Institutional Investor may, within thirty days from the date of receipt of such notice, furnish to the enquiry officer a reply, together with copies of documentary or other evidence relied on by him in support of its reply:
Provided that the enquiry officer may call upon him to supply further information.
(4) The enquiry officer shall, give a reasonable opportunity of hearing to the Foreign Institutional Investor to enable him to make submission in support of his reply under sub- regulation (3) of this regulation.
(5) Before the enquiry officer, the Foreign Institutional Investor may either appear in person or through any person duly authorised by him in writing.
(6) If it is considered necessary, the enquiry officer may ask the Board to appoint a presenting officer to present its case.
(7) The enquiry officer shall, after taking into account all relevant facts and submissions made by the Foreign Institutional Investor and by the presenting officer, if appointed under sub-regulation.
(8) above, submit a report to the Board and recommend the penalty if any to be awarded along with the justification for such penalty.
Show cause notice and order
26.(1) On receipt of the report from the enquiry officer, the Board shall consider the same and issue a show-cause notice to the Foreign Institutional Investor as to why the penalty, which it considers appropriate and which shall be specified in the notice should not be imposed.
(2) The Foreign Institutional Investor shall within twenty-one days of the date of the receipt of the show-cause notice referred to in sub-regulation (1), of this regulation send to the Board a reply to the notice.
(3) The Board after considering the reply to the show-cause notice, if received in time, shall as soon as possible but not later than thirty days from the receipt of the reply, if any, pass such order as it deems fit.
(4) Every order passed under sub- regulation (3) of this regulation shall be self-contained and give reasons for the conclusions stated therein including the justification for the penalty, if any, imposed by that order.
Effect of suspension and cancellation of certificate
27.(1) On and from the date of the suspension of certificate, if ordered under this Chapter, the Foreign Institutional Investor shall cease to buy, sell or otherwise deal in securities in India during the period of suspension.
(2) On and from the date of cancellation of certificate, if ordered under this Chapter, the Foreign Institutional Investor shall cease to buy, sell or otherwise deal in securities in India, except for the purpose of liquidating the existing investments.
Publication of order of suspension and cancellation of certificate
28. The order of suspension or cancellation of certificate under this Chapter shall be published by the Board in at least two daily newspapers.
Appeal to the Securities Appellate Tribunal
29. [Any person aggrieved by an order of the Board made, on and after the commencement of the Securities Laws (Second Amendment) Act, 1999, (ie., after 16th December 1999), under these regulations may prefer an appeal to a Securities Appellate Tribunal having jurisdiction in the matter]
F.No.SEBI/LE/918/95
D.R.MEHTA
CHAIRMAN
SECURITIES AND EXCHANGE BOARD OFINDIA
31Substituted for the earlier provision vide SEBI(Appeal to
Securities Appellate Tribunal) (Amendment) Regulations, 2000 vide S.O.278(E)
dated 28.3.2000
.
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FIRST SCHEDULE - FORMS
FORM A
( regulation 3 )
SECURITIES
AND EXCHANGE BOARD OF INDIA
(FOREIGN INSTITUTIONAL INVESTORS)
REGULATIONS, 1995
APPLICATION FORM FOR GRANT OF CERTIFICATE OF REGISTRATION
AS FOREIGN INSTITUTIONAL INVESTOR
WITH THE SECURITIES ANDEXCHANGE BOARD OF INDIA
SECURITIES AND EXCHANGE BOARD OF
INDIA
Mittal Court `B' Wing, 1st Floor
Nariman Point, Bombay - 400 021, INDIA
1. Name, address, telephone no., telex no. and fax no. of the applicant. In case the applicant already has an office in India, the particulars may also be given for that office.
2. Please indicate whether the applicant belongs to any one or more of the following categories :
Pension Fund, Mutual Fund, Investment Trust, Asset Management Company, Bank, Nominee Company and Incorporated / Institutional Portfolio Manager or their Power of Attorney holder (providing discretionary and non- discretionary portfolio management services).
3. a) The date and place of incorporation of the applicant.
b) Brief description of the principal activities of the applicant and the year of commencement of such activities.
c) Brief description of the group, if any, to which the applicant belongs.
4. Name, address, telephone, telex and fax numbers of the Securities Commission / Self Regulatory Organisation /the relevant statutory authority for the securities market or any other appropriate regulatory authority with whom the applicant is registered or by whom the applicant is regulated in the country where the applicant is incorporated or in the countries of its operations, and the registration number and period of registration.
Please also state whether there has been any instance of violation or non-adherence to the securities laws, code of ethics/conduct, code of business rules, for which the applicant, or its parent/ holding company or affiliate may have been subjected to economic, or criminal liability or suspended from carrying out its operations, or the registration has been revoked, temporarily or permanently.
5. a) Please indicate the names of the clients on whose behalf you propose to invest in India.
[ b) please provide additional information and undertakings, in respect of each client for which sub-account registration is being sought, as specified in Annexure B to this form.]
[In case the applicant is itself a Fund the information in regard to 5(b) may be provided regarding the Fund].
6. Please indicate the manner in which you propose to conduct your investments in India i.e. whether through an establishment in India or through any other office outside India. Please give details, and also the name of the contact person/compliance officer.
7. Name and address of the designated bank branch in India through whom investment is proposed to be made.
8. a) Name, address, telephone no., telex no., and fax no. of the domestic custodian. Please also present the background information on the custodian, including volume of business handled, organisational infrastructure and the number of investment companies for which the domestic custodian is acting, or has acted, as custodian.
b) Particulars of the agreement entered into with the domestic custodian.
ANNEXURE
Documents to be enclosed with the application :
a) Copies of Memorandum and Articles of Association and Investment Management Agreements or any other agreements authorising the applicant to invest on behalf of its clients.
b) Audited financial statements and annual reports for the last 5 years.
c) Documents to support registration or regulation by a Securities Commission and / or Self Regulatory Organisation, or any other appropriate regulatory authority.
d) Copy of the Custodian Agreement with the domestic custodian.
e) Declaration Statement (to be given as below).
We hereby agree and declare that the information supplied in the application, including the attachment sheets, is complete and true.
AND we further agree that we will immediately notify the Securities and Exchange Board of India and the Reserve Bank of India of any change in the information provided in the application.
We further agree that we shall comply with the provisions of the Act, and regulations issued thereunder and all other relevant laws including guidelines issued by the Reserve Bank of India and the Government of India.
We further agree that as a condition of grant of certificate of registration, we shall abide by such operational instructions/ directives as may be issued by Securities and Exchange Board of India under the provisions of the Act and by the Reserve Bank of India from time to time.
For and on behalf of_____________________________________
( Name of the applicant )
Authorised Signatory ________________ ____________________________
( Name ) (Signature)
Date :
Place :
Note:
1. Securities and Exchange Board of India (SEBI) and Reserve Bank of India (RBI) reserve the right to call for any further information from the applicant regarding his application.
2. Applications, superscribed "Application for Registration of Foreign Institutional Investor", should be submitted in duplicate, in sealed envelopes, at Securities and Exchange Board of India's office.
31Substituted for “please provide the following details
regarding the clients:
(i) Date and place of incorporation and constitution of the client (i.e.
partnership firm, private company, public company, pension fund, mutual fund,
investment trust etc.)
(ii) Whether the client is a holding or subsidiary company or any other
company.
(iii) Whether the client is registered with any regulatory agency; if so, the
name and address of the regulatory agency, registration number and date of
registration.
(iv) Objectives and principal activities of the clients (investment / fund
management, finance company, investment company, mutual fund, pension fund
etc.)
(v) Number and types of share holders of the client (i.e. individuals
institutions etc.) - percentage distribution of assets between groups of
shareholders may also be provided, along with details of the number of
beneficiaries on whose behalf the institutional shareholders of the client are
investing.
(vi) Volume of assets of the client’’;
by Securities and Exchange Board of India (Foreign Institutional
Investors) Regulations, 1998 vide notification no.S.O.545(E) dated 30.6.98.
Additional details to be provided by applicants under clause (iv) of sub-regulation (d) of regulation 6 of the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995:
1. Please indicate whether the applicant belongs to any one or more of the following categories ; University funds, endowments, foundations or charitable trusts or charitable societies.
2. Please provide details of the sponsors or organisers of the applicant, the objectives of the applicant, the nature of activities carried on by the applicant and state whether it has invested in securities markets outside the country in which it has been incorporated or established.
3. Please state whether the applicant is registered with any statutory authority in the country of its incorporation or establishment.
4. Please describe the manner in which the funds of the applicant are being managed.
5. Please enclose a copy of the applicant's charter or other documents of incorporation or establishment. ]
32 Inserted by the Securities and Exchange Board of India (Foreign Institutional Investors) Amendment Regulations, 1996 vide notification no. S.O. 702 (E) dated 9.10.96.
PAYMENT
OF FEES
( regulation 7 )
SECURITIES AND EXCHANGE BOARD OF
INDIA
(FOREIGN INSTITUTIONAL INVESTORS) REGULATIONS, 1995.
1) Every applicant eligible for grant of a certificate under regulation 7 shall pay a registration fee of US$ 10,000.
2) The registration fee shall be payable at the time of initial registration as well as at the time of each renewal, within 15 days from the date of intimation from the Board.
[ 2 (A) an application for registration of sub-account under regulation 12 shall be accompanied by a registration fee of US $ 1,000" which shall be payable at the time of initial application for registration as well as at the time of each renewal, and fees paid in respect of renewal shall be paid within 15 days of intimation by the board.]
[3) The registration fee specified above shall be payable by the applicant by a draft in favour of "Securities and Exchange Board of India" or by any other appropriate mode or instrument as may be specified by the Board. ]
34Inserted by the Securities and Exchange Board of India (Foreign
Institutional Investors) Amendment Regulations, 1998 vide notification no. S.O.
545 (E) dated 30.6.98.
35Substituted for "the registration fee specified above shall
be payable by draft in favour of "the Securities and Exchange Board of
India" at Bombay or at the respective regional office" by the
Securities and Exchange Board of India (Foreign Institutional Investors)
Amendment Regulations, 1999 vide notification no. S.O. 263 (E) dated 16.4.99.
THE GAZETTE OF INDIA
EXTRAORDINARY
PART II – SECTION 3 –
SUB-SECTION (ii)
PUBLISHED BY AUTHORITY
SECURITIES AND EXCHANGE
BOARD OF INDIA
MUMBAI, THE 13th
DAY OF FEBRUARY 2001
NOTIFICATION
SECURITIES AND EXCHANGE BOARD OF INDIA
(FOREIGN INSTITUTIONAL
INVESTORS) (AMENDMENT) REGULATIONS, 2001
S.O 128 (E) In exercise of the powers conferred by sub–section (1) of Section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Securities and Exchange Board of India hereby makes the following regulations, namely: -
I. (1) These regulations may be called the Securities and Exchange Board of India (Foreign Institutional Investors) (Amendment) Regulations, 2001.
(2) They shall come into force on the date of
their publication in the official Gazette.
II. In Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995: -
Provided further that where a Foreign Institutional Investor does not desire to renew registration of any of its sub-account(s) or has failed to make an application for renewal of registration of sub-account(s), the Foreign Institutional Investor shall at the time of expiry of registration, obtain, a specific permission from the Board, for disinvesting the securities held by it on behalf of sub-account(s) within a stipulated time period, subject to such terms and conditions as may be specified by the Board."
'(e) commercial paper'
(ii) in sub-regulation (2), in the explanation to proviso, the words, 'commercial paper', shall be inserted, after the words, 'government securities' and before the words, 'and treasury bills'.
(iii) in sub-regulation (3), in clause (c), in
the first proviso, the words, 'commercial paper', shall be inserted, after the
words, 'government securities' and before the words 'including treasury bills.'
[F. No. SEBI/LE/
22961/01]
D.R.MEHTA
Chairman
Securities and Exchange Board of India
Footnote: -
THE GAZETTE OF INDIA
EXTRAORDINARY
PART II – SECTION 3 –
SUB-SECTION (ii)
PUBLISHED BY AUTHORITY
SECURITIES AND EXCHANGE
BOARD OF INDIA
MUMBAI, THE 13th
DAY OF FEBRUARY 2001
NOTIFICATION
SECURITIES AND EXCHANGE BOARD OF INDIA
(FOREIGN INSTITUTIONAL
INVESTORS) (AMENDMENT) REGULATIONS, 2001
S.O 128 (E) In exercise of the powers conferred by sub–section (1) of
Section 30 of the Securities and Exchange Board of India Act, 1992 (15 of
1992), the Securities and Exchange Board of India hereby makes the following
regulations, namely: -
I. (1) These regulations may be
called the Securities and Exchange Board of India (Foreign Institutional
Investors) (Amendment) Regulations, 2001.
(2) They shall come into force on the date of
their publication in the official Gazette.
II. In Securities and Exchange
Board of India (Foreign Institutional Investors) Regulations, 1995: -
Provided further that where a Foreign Institutional
Investor does not desire to renew registration of any of its sub-account(s) or
has failed to make an application for renewal of registration of
sub-account(s), the Foreign Institutional Investor shall at the time of expiry
of registration, obtain, a specific permission from the Board, for disinvesting
the securities held by it on behalf of sub-account(s) within a stipulated time
period, subject to such terms and conditions as may be specified by the
Board."
'(e) commercial paper'
(ii) in sub-regulation (2), in the explanation
to proviso, the words, 'commercial paper', shall be inserted, after the words,
'government securities' and before the words, 'and treasury bills'.
(iii) in sub-regulation (3), in clause (c), in
the first proviso, the words, 'commercial paper', shall be inserted, after the
words, 'government securities' and before the words 'including treasury bills.'
[F. No. SEBI/LE/
22961/01]
D.R.MEHTA
Chairman
Securities and Exchange Board of
India
Footnote: -
|
CHAPTER I PRELIMINARY Short title and commencement
1. (1) These regulations may be
called the Securities and Exchange Board of India (Insider Trading)
Regulations, 1992. (2) These regulations shall come
into force on the date of the publication in the Official Gazette. Definitions
2. In these regulations, unless the context otherwise
requires;- (a) "Act" means
the Securities and Exchange Board of India Act, 1992 (15 of 1992); (b) "body corporate"
means a body corporate as defined under section 2 of the Companies Act, 1956
(1 of 1956); (c) "connected person"
means any person who- (i) is a director, as defined in
clause (13) of section 2 of the Companies Act, 1956 (1 of 1956) of a company,
or is deemed to be a director of that company by virtue of sub-clause (10) of
section 307 of that Act (d) "dealing in
securities" means an act of buying, selling or agreeing to buy, sell
or deal in any securities by any person either as principal or agent; (e) "insider" means
any person who, is or was connected with the company or is deemed to have
been connected with the company, and who is reasonably expected to have
access, by virtue of such connection, to unpublished price sensitive
information in respect of securities of the company, or who has received or
has had access to such unpublished price sensitive information; (f) "investigating
authority" means any officer of the Board or any other person, not
being a firm, body corporate or an association of persons, having experience
in dealing with the problems relating to the securities market and who is
authorised by the Board under Chapter III; (g)"officer of a company"
means any person as defined in clause (30) of section 2 of the Companies Act,
1956 (1 of 1956) including an auditor of the company; (h)"person is deemed to
be a connected person" if such person- (i) is a company under the same
management or group or any subsidiary company thereof within the meaning of
section (1B) of section 370, or sub-section (11) of section 372, of the
Companies Act, 1956 (1 of 1956) or sub-clause (g) of section 2 of the
Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969) as the case
may be; (iii)is a merchant banker, share
transfer agent, registrar to an issue, debenture trustee, broker, portfolio
manager, Investment Advisor, sub- broker, Investment Company or an employee
thereof, or, is a member of the Board of Trustees of a mutual fund or a
member of the Board of Directors of the Asset Management Company of a mutual
fund or is an employee thereof who have a fiduciary relationship with the
company; (iv) is a member of the Board of
Directors, or an employee, of a public financial institution as defined in
Section 4A of the Companies Act, 1956; (vii)is a banker of the company.
(i) "relative"
means a person, as defined in section 6 of the Companies Act, 1956 (1 of
1956) (j)"stock exchange"
means a stock exchange which is recognised by the Central Government under
section 4 of Securities Contracts (Regulation) Act, 1956 (42 of 1956); (k)"unpublished price
sensitive information" means any information which relates to the
following matters or is of concern, directly or indirectly, to a company, and
is not generally known or published by such company for general information,
but which if published or known, is likely to materially affect the price of
securities of that company in the market - (i) financial results (both
half-yearly and annual) of the company: (ii) intended declaration of
dividends (both interim and final); (iii) issue of shares by way of
public rights, bonus, etc.; (iv) any major expansion plans
or execution of new projects; (v) amalgamation, mergers and
take-overs; (vi) disposal of the whole or
substantially the whole of the undertaking; (vii) such other information as
may affect the earnings of the company. (viii) any changes in policies,
plans or operations of the company. |
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