FPIs to get registration in 10 days; stake capped at 10%

To ring-fence the new regulations from possible misuse, the foreign portfolio investor (FPIs) would need to be from countries that are member of global bodies like Financial Action Task Force (FATF), IOSCO (International Organisation of Securities Commissions).

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Besides, the entities from any country against which bodies like FATF have issued warning for AML/CFT (Anti Money Laundering and Combating the Financing of Terrorism) deficiencies would not be allowed to register as FPIs.
As per the draft regulations, FPIs would need to inform Sebi about any penalty, pending litigations or proceedings or investigations for which action may have been taken or can be taken by an overseas regulator against it.
The FPIs would also need to obtain separate and distinct Permanent Account Number (PAN) from the Income Tax Department.
In case the same set of ultimate beneficial owners invest through multiple entities, all such entities would be treated as part of same group and their investments would be clubbed together for the purpose of 10 per cent cap.
They would also need to maintain propers books of accounts and records, while entities having opaque structures to hide identity of beneficial owners would not be allowed to register as FPIs.
The Sebi can also order inspections on suo motu basis or upon receipt of any complaint, to ensure that propers accounts and records, including telephone records and electronic records and documents, are being maintained, or to ensure compliance with the applicable norms.
The Sebi would also be entitled to recover from the concerned entity the expenses incurred for the purposes of inspections and investigations.