SEBI, on June 28, 2017, issued a consultation paper on Easing of Access Norms for Investment by FPIs, which inter alia proposes the following key amendments to the FPI Regulations:

i.  The jurisdictions from which Category I FPI registrations are allowed should also include jurisdictions that are compliant with the extant foreign exchange regulatory framework and that have formal diplomatic ties with India (such as Canada). Presently, such registrations are limited to those entities which are resident of a country whose securities market regulator is either a signatory to International Organisation of Securities Commissions’ Multilateral Memorandum of Understanding or has a bilateral Memorandum of Understanding with SEBI;

ii.  Discontinuance of the requirement to seek prior approval from SEBI in case of change of the designated depository participant / custodian of the FPI.

iii.  Deeming as ‘broad based’ (for the purpose of Category II FPI registration) applicant funds which have banks, sovereign wealth funds, insurance/ reinsurance companies, pension funds, and/or exchange traded funds as underlying investor(s), subject to the condition that such underlying investor(s) in the applicant fund should either individually or jointly hold majority stake in the applicant fund at all times; and

iv.  Permitting different custodians for FPI and foreign venture capital investor (‘FVCI’) registrations for the same entity (presently, an entity holding FPI and FVCI registration is required to have the same custodian for both registrations). SEBI has also proposed that if an entity has a FPI registration and a FVCI registration, then the investment limit of 10% under the FPI Regulations should also include FVCI investments by entities forming a part of the same investor group. Further, SEBI proposes that FPIs must report details of all other FVCIs which share more than 50% common beneficial ownership to the designated depository participant at the time of seeking registration, and FVCI applicants are also proposed to be mandated to provide details of ‘group’ FPI accounts to SEBI at the time of making an application for FPI registration.

The Consultation Paper also prescribes norms for rationalization of fit and proper criteria for FPIs, rationalization of certain compliance requirements, and other related matters. SEBI invited comments and views on the consultation paper by stakeholders, the window for which is now closed.