TaxTMI 
TaxTMI 
Know Your Client Requirements for Foreign Portfolio Investors (FPIs)
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..... Alternative Investment Funds (AIFs) Sir/ Madam, Subject: Know Your Client Requirements for Foreign Portfolio Investors (FPIs) 1. This has reference to SEBI circular No CIR/MIRSD/11/2012 dated September 05, 2012 and subsequent SEBI circular No. CIR/MIRSD/07/2013 dated September 12, 2013 whereby risk based documentation requirements were prescribed for Know Your Client (KYC) requirements of eligible foreign investors classified as category I, II and III investing under Portfolio Investment Scheme (PIS) route. KYC of FPIs is accordingly being done. 2. Upon a review, it has been decided to make the following changes :- (a) Identification and verification of Beneficial Owners (i) Beneficial Owner (BO) is the natural person(s)....
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....f the material shareholder/ owner entity. Only beneficial owner with holdings equal & above the materiality thresholds in the FPI need to be identified through the aforesaid look through principle. (vi) Where no material shareholder/owner entity is identified in the FPI using the materiality threshold ((referred at (iii) & (iv) above) for controlling ownership interest basis and also on control basis (for companies and trusts), BO shall be the senior managing official of the FPI. (vii) In case of companies/ trusts represented by service providers like lawyers/ accountants, FPIs should provide information of the real owners/ effective controllers of those companies / trusts. (viii) If the BO exercises controls through means like voting....
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....nbsp; This List should be certified by FPI. FPI should also certify that there are no other BOs other than those referred in list. The existing FPIs should provide the list of BOs (in aforementioned format) within six months from the date of this circular. (c) Indians as BO of FPIs In reply to FAQ 91, it has been clarified that "NRI/PIO is not eligible to make investments as an FPI. Accordingly, a company which is majority owned by one or more NRI/PIOs shall not be allowed to make investments as an FPI. However, if such company is appropriately regulated it may be given registration as Category II FPI for the purpose of acting as investment manager for other FPIs. This position is the same as in FII regime wh....
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....s do not conform to the above requirements, they shall ensure compliance within six months of the date of this circular. (e) KYC review As per SEBI circular dated September 12, 2013, eligible foreign investors shall be subject to KYC review as and when there is any change in material information / disclosure. It is however decided that there should be comprehensive KYC review of FPIs on a periodical basis. The KYC review (including change in BOs / their holdings) should be done based on risk categorization of FPIs. In case of high risk clients (including those coming from high risk jurisdictions) it should be done on yearly basis. In case of all other clients, the KYC review should be conducted every 3 years preferably at the time ....
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....Law Enforcement Agencies, the relevant documents would be provided. (ii) Further, SEBI vide circular dated September 12, 2013 has exempted Category III FPIs from submission of proof of address of BOs, Senior Management and Authorised Signatories. Since Category III FPIs are high risk investors, it is decided that "declaration on letter head" be provided by them. In respect of (i) and (ii) above, the existing FPIs should provide these documents within six months from the date of this circular. 3. In view of manner of identifying Beneficial Ownership of FPIs having been specified in this circular, it is decided that clubbing of investment limit for FPIs shall also be on said basis. All existing FPIs whose clubbed investment in equ....