Jul 01, 2016

Changes in Conditions for Issuance and Transfer of Offshore Derivative Instruments

SEBI has, by way of a circular dated June 10, 2016, introduced the following key changes in the conditions for issuance and transfer of Offshore Derivative Instruments (‘ODI’), effective from July 1, 2016:i. Beneficial owners of corporate subscribers are to be verified on a look-through basis, as per the thresholds set out in the Prevention of Money-laundering (Maintenance of Records) Rules, 2005, i.e., 25% in the case of a company and 15% in case of partnership firms/ trusts/ unincorporated bodies, and Know Your Customer documentation has to be obtained from beneficial owners exceeding these thresholds. If no entity’s holding is in excess of the thresholds, the ODI issuer must obtain the identity and address proof of the relevant natural person who holds the position of senior managing official of the material shareholder/ owner entity;ii. Any transfer of ODIs, issued by or on behalf of the ODI issuer, is to be made to only persons eligible to deal in ODIs, with the prior consent of the ODI issuer (unless the transferee is pre-approved by it) and reported to SEBI on a monthly basis;iii. ODI issuers must file suspicious transaction reports (if any) with the Indian Financial Intelligence Unit;iv. ODI issuers must reconfirm ODI positions on a semi-annual basis, and report any deviations from the monthly reports to SEBI; andv. ODI Issuers must carry out a periodical review and evaluation of its controls, systems and procedures with respect to ODIs, and their chief executive officer must submit a certificate in this regard to SEBI annually.




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