What are the regulations regarding Portfolio Investments by Foreign Institutional Investors (FIIs)?
- FIIs include Asset Management Companies, Pension Funds, Mutual Funds, and Investment Trusts as Nominee Companies, Incorporated / Institutional Portfolio Managers or their Power of Attorney holders, University Funds, Endowment Foundations, Charitable Trusts and Charitable Societies.
- SEBI acts as the nodal point in the registration of FIIS. RBI has granted General Permission to SEBI Registered FIIs invest in India under the Portfolio Investment Scheme.
- All FIIs and their sub-accounts taken together cannot acquire more than 24% of the paid up capital of an Indian Company. Indian Companies can raise the above mentioned 24% ceiling to the Sectoral Cap / Statutory Ceiling as applicable by passing a resolution by its Board of Directors followed by passing a Special Resolution to that effect by its General Body.
What are the regulations for Foreign Venture Capital Investment?
A Foreign Venture Capital Investor registered with SEBI may make investment in a Venture Capital Fund for an Indian Venture Capital Undertaking, in the manner and subject to the terms and conditions specified by the RBI
What are the regulations regarding Portfolio Investments by NRIs/PIOs
- Non Resident Indian (NRIs) and Persons of Indian Origin (PIOs) can purchase/sell shares/convertible debentures of Indian companies on Stock Exchanges under Portfolio Investment Scheme. For this purpose, the NRI/PIO has to apply to a designated branch of a Bank which deals in Portfolio Investment. All sale/purchase transaction is to be routed through the designated branch.
- An NRI or a PIO can purchase shares up to 5% of the paid up capital of an Indian company. All NRIs/PIOs taken together cannot purchase more than 10% of the paid up value of the company. (This limit can be increased by the Indian company to 24% by passing a General Body resolution).
- The sale proceeds of the repatriable
investments can be credited to the NRE/NRO etc. accounts of
the NRI/PIO whereas the sale proceeds of non-repatriable investment
can be credited only to NRO accounts.
The sale of shares will be subject
to payment of applicable taxes.