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    FII Investment in India

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    poojathx
    Entities that propose to invest proprietary funds or on behalf of broad-based funds with more than 20 investors can register as a Foreign Institutional Investor (FII) in India. To qualify for FII registration, an applicant must have a track record, professional competence, financial soundness, experience, general reputation for fairness and integrity. They must also be regulated in their home country and have permission from the Reserve Bank of India. Registered FIIs can invest in stocks, bonds, derivatives and other securities but a single FII cannot own more than 10% of a company and sub-accounts are limited to 5%.

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    FII Investment in India

    Uploaded by

    poojathx
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    Entities that propose to invest proprietary funds or on behalf of broad-based funds with more than 20 investors can register as a Foreign Institutional Investor (FII) in India. To qualify for FII registration, an applicant must have a track record, professional competence, financial soundness, experience, general reputation for fairness and integrity. They must also be regulated in their home country and have permission from the Reserve Bank of India. Registered FIIs can invest in stocks, bonds, derivatives and other securities but a single FII cannot own more than 10% of a company and sub-accounts are limited to 5%.

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    Entities that propose to invest proprietary funds or on behalf of broad-based funds with more than 20 investors can register as a Foreign Institutional Investor (FII) in India. To qualify for FII registration, an applicant must have a track record, professional competence, financial soundness, experience, general reputation for fairness and integrity. They must also be regulated in their home country and have permission from the Reserve Bank of India. Registered FIIs can invest in stocks, bonds, derivatives and other securities but a single FII cannot own more than 10% of a company and sub-accounts are limited to 5%.

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    48 views2 pages

    FII Investment in India

    Uploaded by

    poojathx
    Entities that propose to invest proprietary funds or on behalf of broad-based funds with more than 20 investors can register as a Foreign Institutional Investor (FII) in India. To qualify for FII registration, an applicant must have a track record, professional competence, financial soundness, experience, general reputation for fairness and integrity. They must also be regulated in their home country and have permission from the Reserve Bank of India. Registered FIIs can invest in stocks, bonds, derivatives and other securities but a single FII cannot own more than 10% of a company and sub-accounts are limited to 5%.

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    FII Investment - India

    Entities who propose to invest their proprietary funds or on behalf of "broad based" funds (fund having
    more than twenty investors with no single investor holding more than 10 per cent of the shares or units
    of the fund) or of foreign corporate and individuals and belong to any of the under given categories can
    be registered for FII

    Investment trust AnInvestment trustis a form ofcollective investment.Investment trusts areclosed-end


    fundsand are constituted aspublic limited companies. Acollective investment schemeis a way
    ofinvestingmoney with others to participate in a wider range of investments than feasible for most
    individual investors, and to share the costs and benefits of doing so

    Hedge funds

    A hedge fund is an investment fund open to a limited range of investors that is permitted by regulators
    to undertake a wider range of investment and trading activities than other investment funds, and that,
    in general, pays aperformance feeto itsinvestment manager. Every hedge fund has its own investment
    strategy that determines the type of investments and the methods of investment it undertakes. Hedge
    funds, as a class, invest in a broad range of investments including shares, debt and commodities. Many
    hedge funds investments in India were facilitated by global investors borrowing at near zero interest
    rates in Japan and investing the proceeds in High interest markets like India.

    Eligibility criteria for applicant seeking FII registration

    As per Regulation 6 of SEBI (FII) Regulations, 1995, Foreign Institutional Investors are required to fulfil
    the following conditions to qualify for grant of registration:

     The applicant should have track record, professional competence,financialsoundness,


    experience, general reputation of fairness and integrity;
     The applicant should be regulated by an appropriate foreign regulatory authority in the same
    capacity/category where registration is sought from SEBI. Registration with authorities, which
    are responsible for incorporation, is not adequate to qualify as Foreign Institutional Investor.
     The applicant is required to have the permission under the provisions of the Foreign Exchange
    Management Act, 1999 from the Reserve Bank of India.
     The 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
    Sub account

    A ‘Sub-account’ is the underlying fund on whose behalf the FII invests. Sub- Accounts can include those
    foreign corporate, foreign individuals, and institutions, funds or portfolios established or incorporated
    outside India on whose behalf investments are proposed to be made in India by a FII.

    It is possible for a registered sub-account to transfer from one FII to another. In such a case, the FII to
    whom it is proposed to be transferred has to request SEBI with the following documentation.

     A declaration that it is authorized to invest on behalf of the sub-account.


     A no-objection letter for the transfer of the sub-account from the transferor FII.

    Investment by FII is restricted to 24% of paid-up capital of the company which can be extended up to
    49% per sectoral cap by board resolution followed by special resolution. Single FII investment can’t
    exceed 10% of paid-up capital of the company and single sub-account investment can’t exceed 5% of the
    paid-up capital

    Eligible Securities

    A FII can make investments only in the following types of securities

     Securities in the primary and secondary markets including shares, debentures andwarrants of
    unlisted , to- be-listed companies or companies listed on a recognizedstock exchange
     Units of schemes floated by domestic mutual funds including Unit Trust of India,whether listed
    on a recognized stock exchange or not, and units of scheme floated bya Collective Investment
    Scheme.
     Government Securities
     Derivatives traded on a recognized stock exchange – like futures and options. FIIs cannow invest
    in interest rate futures that were launched at the National Stock Exchange(NSE) on 31st August,
    2009.
     Commercial paper
     Security receipts

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