Sebi to frame uniform guidelines for all classes of foreign investors


In a move aimed at simplifying the investment process for overseas entities and strengthen market surveillance, the Securities and Exchange Board of India (Sebi) has proposed uniform guidelines for all classes of foreign investors.

The regulator also announced that the profitability criteria would not be applicable to the follow-on public offers (FPOs) of loss-making companies.

Sebi has decided to prepare draft guidelines in this regard with an aim to make uniform rules for different classes of foreign investors such as foreign institutional investors (FIIs), non-resident Indians (NRIs), foreign venture capital investors (FVCIs) and qualified foreign investors (QFIs).

"With a view to rationalise/harmonise different routes for foreign portfolio investments, Sebi will prepare draft guidelines based on the guidance of the Working Group on Foreign Investment in India (WGFII), for consideration of the government so that uniform guidelines are made for various categories of investors such as FII, FVCI, NRI, QFI etc," Sebi said in a statement after the board meeting.

Companies were earlier required to have a three-year profit record for IPOs, but there was a lack of clarity with regard to FPOs. "It is clarified that listed companies coming out with FPOs need not meet the profitability criteria," Sebi said.

Sebi also relaxed its rules regarding the debt limit allocation mechanism for FIIs, which have emerged as a significant force to the Indian capital market over the years. It said that "with effect from January 1, 2014, FIIs should be allowed to re-invest during the calendar year to the extent of 50 per cent of their debt holdings at the end of the previous calendar year".

"The utilisation period for government debt and corporate debt limits will be reduced to 30 days and 60 days, respectively," Sebi said.

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