NRIs owned offshore cos can act as investment manager for FPIs
Jul 08 2014 , New Delhi
As per Sebi, non-resident Indian (NRI) or person of Indian origin (PIO) is not eligible to make investments as an foreign portfolio investor (FPI).
Accordingly, a company which is majority owned by one or more NRI/PIOs would not be allowed to make investments as an FPI.
"However, if such company is appropriately regulated it may be given registration as Category II FPI for the purpose of acting as investment manager for other FPIs," as per information available with the Securities and Exchange Board of India (Sebi).
FPIs encompasses all foreign institutional investors (FIIs), their sub-accounts and qualified foreign investors (QFI) under a new regime which has been effective from June 1.
The new regime divides FPIs into three categories as per their risk profile and the KYC (know your client) requirements.
Category—I FPIs (lowest risk category) would include foreign governments and government-related foreign investors.
Category—II FPIs include appropriately regulated entities, broad-based funds whose investment manager is appropriately regulated, university funds, university-related endowments and pension funds.
Category—III FPIs would include all others not eligible under the first two categories.