TaxTMI 
TaxTMI 
Measures to address regulatory arbitrage with respect to Offshore Derivative Instruments (ODIs) and FPIs with segregated portfolios vis-à-vis FPIs
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....Master Circular. Further, requirements related to segregated portfolios are specified in Part A of the FPI Master Circular. 2. It has been decided to modify certain requirements related to ODIs and FPIs with segregated portfolios. In view of the same, the FPI Master Circular stands modified as follows: 2.1. Sub-paras (i) to (iii) of Para 1 of Part D shall be modified as under: "1. Conditions for issuance of ODIs i. A Foreign Portfolio Investor shall issue ODIs only through a separate dedicated FPI registration with no proprietary investments. Such FPI registration shall be in the name of the FPI with "ODI" as suffix under the same PAN. Where such addition is being requested for an existing FPI, this addition of suffix will not be considered a change in name of FPI. DDP may process the request in such cases and issue a new FPI registration certificate. Provided the requirement of separate dedicated registration shall not apply for issuance of ODIs with Government securities as reference/underlying. ii. A Foreign Portfolio Investor shall not issue ODIs with derivatives as reference/underlying. iii. A Foreign Portfolio Investor shall ....
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....ions and format for disclosures shall be spelt out in the Standard Operating Procedure (SOP) framed and adopted by Depositories, DDPs/Custodians and ODI issuing FPIs in consultation with SEBI. The SOP shall be made public and updated from time to time, in consultation with SEBI. iii. ODI subscribers satisfying any of the criteria listed below shall not be required to make the disclosures as specified in Para (i) above: a) Government and Government related investors registered as FPIs under Regulation 5 (a) (i) of the FPI Regulations. b) Public Retail Funds ('PRFs') as defined under Regulation 22(4) of the FPI Regulations, subject to independent validation of the same by ODI issuing FPIs. c) Exchange Traded Funds (with less than 50% exposure to India and India-related equity securities) and entities listed on specified Exchanges of the permissible jurisdictions as may be notified by the Board from time to time. To start with, the list of permissible jurisdictions and exchanges as mentioned in Annexure A to SEBI circular SEBI/HO/MRD2/DCAP/CIR/P/2019/146 dated Nov 28, 2019 shall be considered as permissible exchanges and jurisdictions for this claus....
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....rther identification of entities having ownership interest, economic interest, or control rights of such an entity on look through basis, shall not be required. vi. In addition to the criteria listed under Para (iii) above, ODI subscriber having more than 50% of its equity ODI positions in ODIs referenced to securities of a single Indian corporate group shall not be required to make the additional disclosures as specified in Para (i) above, subject to compliance with all of the following conditions: a) The apex company of such corporate group has no identified promoter. For this purpose, the list of corporate groups based on the corporate repository published by the Stock Exchanges and their respective apex companies having no identified promoters has been made public by Depositories. b) The ODI subscriber does not have more than 50% of its equity ODI positions in ODIs referenced to securities of a single Indian corporate group, after disregarding its positions in ODIs referenced to securities of the apex company (with no identified promoter). c) The composite positions of all such ODI subscribers (that meet the 50% concentration criteria excludi....
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....the Indian markets. A list of such ODI subscribers shall be made public by the Depositories and ODI issuing FPIs shall ensure compliance with the same. x. After realignment, in case the ODI subscriber's positions exceed the specified threshold on a subsequent date, the timeline for realignment shall restart from such subsequent date. xi. ODI issuing FPIs shall collect the details/disclosures as specified in Para (i) from the ODI subscribers whose equity ODI positions continue to exceed the specified threshold post expiry of timelines mentioned in Para (ix) within 30 trading days from the expiry of such timelines. ODI issuing FPIs shall submit the disclosures made by ODI subscribers to Depositories within 5 trading days from the date of such disclosure made by such ODI subscribers. Non-disclosure by ODI subscriber in this regard shall render the ODI subscriber ineligible to subscribe/hold any ODI positions through any ODI issuing FPI. ODI issuing FPIs shall redeem all ODI positions held by such ODI subscriber(s) within 180 calendar days from the date of such ineligibility. A list of such ODI subscribers shall be made public by the Depositories and ODI issuing FPIs ....
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.... of ODI issuing FPIs corresponding to the same underlying/reference shares may be counted only once so as to avoid double counting. 2. Economic interest means returns from the investments made by the FPI. 3. Ownership interest means ownership of shares or capital of the entity or entitlement to derive profits from the activity of the entity. 4. Control shall have the same meaning as mentioned in Regulation 2(f) of the FPI Regulations." 2.4. Sub-para (xv) of Para 1 of Part C shall be modified as under: "xv. The constituents of FPI investor group that collectively hold more than INR 25,000 crore of equity AUM/positions in the Indian markets, referred to in Para (xiii)(b) above, shall be exempted from making the additional disclosures if any constituent of investor group and ODI subscriber(s), referred to in Para (xiii)(b) above, qualifies for exemption and the net equity AUM/positions of the remaining constituents of the investor group & ODI subscribers, after deducting the AUM/positions of such exempted FPIs/ODI subscribers, falls below INR 25,000 crore. After making the aforesaid deductions of AUM/positions of such exempted FPIs/ODI s....