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SEBI simplifies foreign investment norms

The Securities and Exchange Board of India (SEBI) Tuesday announced an overhaul in rules related to foreign investments that include simplified procedure for registration and easier compliance requirements.

The SEBI board accepted the recommendations of the K.M. Chandrasekhar committee on "rationalisation of investment routes and monitoring of foreign portfolio investments".

The committee headed by former cabinet secretary K.M. Chandrasekhar had recommended a massive overhaul in norms related to foreign investors.

SEBI said in a statement that its board discussed the Chandrasekhar committee report and accepted the recommendations.

The changes include easing registration norms and simplification in compliance requirements.

Simplified and uniform entry norms for foreign investors by merging existing Foreign Institutional Investors (FIIs), Sub Accounts and Qualified Foreign Investors (QFIs) into a new investor class to be termed as "Foreign Portfolio Investors" (FPIs).

Portfolio investments is defined as investment by any single investor or investor group, which shall not exceed 10 percent of the equity of an Indian company.

Any investment beyond the threshold of 10 percent shall be considered as Foreign Direct Investment (FDI).

"In order to make the procedure much simpler, prior direct registration of FIIs and Sub Accounts with SEBI be done away with. Instead, DDPs authorised by SEBI would register FPIs on behalf of SEBI subject to compliance with KYC requirements," SEBI said in a statement after the board meeting in Mumbai.

"While accepting the recommendations of the committee the Board decided that the recommendations concerning SEBI would be implemented by SEBI and it would refer the other recommendations to government of India for implementation," it said.