SEBI has vide its circular dated September 12, 2013 detailed KYC requirements of Eligible Foreign Investors investing through PIS route. The requirements are based on the recommendations of “Committee on Rationalization of Investment Routes and Monitoring of Foreign Portfolio Investments” under the Chairmanship of Shri K. M. Chandrasekhar.
a) The Eligible Foreign Investors have been divided into three categories. Category I includes government or government related entities. Category II entities are regulated entities in other jurisdictions. Category III are non regulated entities.
b) The circular provides for minimum documentation requirements.
c) The requirements for obtaining photo identities, address proofs or any other documentary requirements of the beneficial owner, senior management personnel, authorized signatories have been done away with for the Category I and II eligible foreign investors.
Attention is also drawn to Rule 9(2) of the PML (Maintenance of Records) Rules, 2005 (Government of India, Ministry of Finance, Department of Revenue, Notification dated August 27, 2013) which provides that a reporting entity may rely on third party client due diligence subject to conditions mentioned therein.
The simplification in the rules should lead to smoother on-boarding of eligible foreign investors and result in higher inflows into the country.
The circular is available on the SEBI website : www.sebi.gov.in