On July 13, 2018, SEBI issued a circular on monitoring of investment limits applicable to FPIs in case of primary market issuances. Under the SEBI (Foreign Portfolio Investors) Regulations, 2014 (‘FPI Regulations’), a single FPI or an investor group (including entities with the same ultimate beneficial owner) cannot acquire more than 9.99% of the total issued capital of a company.

SEBI had previously clarified in its FAQs that, for the purpose of identifying the investor group, the Designated Depository Participant (‘DDP’) is required to obtain the details provided by the FPI under reporting requirements in accordance with the FPI Regulations and that depositories should monitor the investment limits at the level of the investor group based on information provided by DDPs. To ensure compliance with these requirements, SEBI has mandated that at the time of finalizing the basis of allotment during primary market issuances, Registrar and Transfer Agents (‘RTA’) should: (i) use Permanent Account Numbers to verify compliance for a single foreign portfolio investor; and (ii) obtain validation from depositories to ensure there is no breach of investment limits within the timelines for issue procedure.