SEBI (Foreign Portfolio investors) Regulations, 2014 (“Regulation”) mandated that the purchase of equity shares of each company by a single portfolio investor or an investor group shall be below 10 (ten) percent of the total issued capital of the company. Further the Regulation required that in case the ultimate beneficial owner(s) invest through multiple entities, such entities shall be treated as part of the same investor group and the investment limits of all the entities shall be clubbed as applicable to a single portfolio investment.
SEBI through this circular IMD/FPIC/CIR/P/2018/114 dated 13 July 2018 has ensured compliance of the above, at the time of allotment during primary market issuances. The Registrar and Transfer Agents (RTAs) shall:
- Use Permanent Account Number (PAN) issued by Income Tax Department of India for checking compliance for a single portfolio investor; and
- Obtain the validation from the depositories for the foreign portfolio investor who have invested in the particular primary market issuance to ensure there is no breach of the investment limit.
Further the circular also mandates for the depositories to put in place the necessary systems for sharing information with RTAs within the timelines for issue procedure, as prescribed by SEBI.