FII registration time in india and procedure
FII registration time in india and terms FAQ
1>What is the procedure for registration of Foreign Institutional Investor in india(FII)?
Application for registration as an FII may be made in Form A. The format of Form A is provided in the SEBI (FII) Regulations, 1995 .The application form and all supporting documents must be submitted in duplicate, one set each for SEBI and Reserve Bank of India. Both sets of application are to be sent to SEBI only. If the applicant is eligible and all documents are submitted with the application, the eligibility is generally conveyed with 10 to 12 days of receipt of application by SEBI.
Application may be sent to:
The Division Chief
FII Division
Securities and Exchange Board of India,
224, Mittal Court, ‘B’ Wing, 1st Floor,
Nariman Point, Mumbai – 400 021.
INDIA
The registration procedure operates as a single window procedure through SEBI in which the following steps are involved.
SEBI forwards one set to Reserve Bank of India.
The application is processed by SEBI to determine its eligibility for grant of registration as foreign institutional investor.
After the initial processing is complete, SEBI writes to Reserve Bank of India mentioning the eligibility of the applicant. At the same time , a letter is sent to applicant asking it to submit the registration fees of US$5,000 through a demand draft drawn in favour of "Securities and Exchange Board of India" payable at New York.
Reserve Bank of India gives approval to the FII through its designated bank. This approval is granted Foreign Exchange Management Act and enables the FII(s) to open a bank account. This is a special non-resident rupee account of the FII meant purely for inward remittance and meeting payment obligation with regard to securities market. It may be noted that all balance lying in this account are fully repatriable.
Upon receipt of fees from the applicant and FEMA approval from Reserve Bank of India, SEBI grants the certificate of registration, which is valid for five years, and may be renewed thereafter.
2>What documents are required to be submitted at the time of applying for registration as an FII?
Application in Form A duly signed by the authorised signatory of the applicant.
Certified copy of the relevant clauses or articles of the Memorandum and Articles of Association or the agreement authorizing the applicant to invest on behalf of its clients
Audited financial statements and annual reports for the last one year , provided that the period covered shall not be less than twelve months.
A declaration by the applicant with registration number and other particulars in support of its registration or regulation by a Securities Commission or Self Regulatory Organisation or any other appropriate regulatory authority with whom the applicant is registered in its home country.
A declaration by the applicant that it has entered into a custodian agreement with a domestic custodian together with particulars of the domestic custodian.
A signed declaration statement that appears at the end of the Form.
Declaration regarding fit & proper entity.
3>Who can be registered as an FII?
The applicant should belong to any of the following categories:
1. Pension Funds
2. Mutual Funds
3. Investment Trust
4. Insurance or reinsurance companies
5. Endowment Funds
6. University Funds
7. Foundations or Charitable Trusts or Charitable Societies who propose to invest on their own behalf, and
1. Asset Management Companies
2. Nominee Companies
3. Institutional Portfolio Managers
4. Trustees
5. Power of Attorney Holders
6. Bank
Who propose to invest their proprietary funds or on behalf of "broad based" funds or on of foreign corporate and individuals.
4>What are the eligibility criteria to be fulfilled by the applicant seeking FII registration?
As per Regulation 6 of SEBI (Foreign Institutional Investors) Regulations,1995, Foreign Institutional Investors are required to fulfill the following conditions to qualify for grant of registration:
Applicant should have track record, professional competence, financial soundness, experience, general reputation of fairness and integrity.
The applicant should be regulated by an appropriate foreign regulatory authority in the same capacity/ category where registration is sought from SEBI. Registration with authorities, which are responsible for incorporation, is not adequate to qualify as Foreign Institutional Investor.
The applicant is required to have the permission under the provisions of the Foreign Exchange Management Act, 1999 from the Reserve Bank of India.
Applicant must be legally permitted to invest in securities outside the country or its in-corporation / establishment.
The applicant must be a "fit and proper" person.
The applicant has to appoint a local custodian and enter into an agreement with the custodian. Besides it also has to appoint a designated bank to route its transactions.
Payment of registration fee of US$ 5,000.00.
5>How much time does it take for procuring registration as a Foreign Institutional Investor?
SEBI would generally communicate the eligibility for grant of registration as Foreign Institutional Investor, within 10-12 days of receipt of complete application with relevant enclosures.
6>What is the procedure for registration of sub-account?
The FII has to apply on behalf of the proposed sub-account by submitting Annexure B of the Regulations duly filled and signed by both the FII and sub-account . Fees of US$ 1000 by means of a demand draft favouring " Securities and Exchange Board of India " payable at New York should be submitted along with Annexure B.
7>Who can invest as sub-accounts of an FII?
A sub-account includes those institutions, established or incorporated outside India and those funds, or portfolios, established outside India, whether incorporated or not and corporate and individuals, on whose behalf investments are proposed to be made in India by a Foreign Institutional Investor. It may however be noted that Non-resident Indians and Overseas Corporate Bodies (OCB) are not entitled to get registered as sub- account.
There are two categories of sub-accounts:
Broad-based / Proprietary sub-accounts which are allowed to individually invest upto 10% of the total issued capital.
Foreign Corporate and foreign individuals. Investments by each sub-account in this category should not exceed 5% of the issued capital.
8>What is a broad based fund (sub account)?
A broad based fund is a fund, which has at least 20 shareholders and no single investor holds more than 10% of shares and units of the fund. In case, if any investor holds more than 10% of shares or units of the fund, then it in turn should be broad based.The proprietary funds of the FII shall not be invested through a broad-based fund.
9>What is a proprietary fund (sub account) ?
A Proprietary Fund is a fund wherein the ownership of the funds is that of the Foreign Institutional Investor.
10>Do all sub-accounts need to be broad-based?
No. Proprietary, Foreign corporates and foreign individuals need not be broad-based.
11>How many days are required to register as sub-accounts?
In case of the registered Foreign Institutional Investor, it would take 3 working days from the date of receipt of complete application and fees.
12>What is the method for payment of registration fees?
Registration fee for a Foreign Institutional Investor is US$ 5,000 and that for a sub-account is US$ 1,000.
The fee may be paid by a bankers cheque or bank draft drawn in favour of "Securities and Exchange Board of India" payable at a bank in New York.
13>Is it necessary to submit the custody agreement with the application itself or it could be submitted before the registration procedures are completed?
It is not necessary to submit the custodian agreement. The applicant only has to declare that it has entered into a custodian agreement and should submit particulars of the domestic custodian.
14>In which name should the securities be registered?
The Foreign Institutional Investor has the choice to register the securities in the following names:
In the name of the Foreign Institutional Investor if the FII is investing on its own behalf.
In the name of the sub-account if the FII is investing on behalf of the sub-account
In the name of the Foreign Institutional Investor a/c sub-account if the FII is investing on behalf of the sub-account
16>What is the procedure for transferring a sub-account from one registered Foreign Institutional Investor to another?
In case if a registered sub-account wishes to transfer from one registered Foreign Institutional Investor to another, then the FII to whom it is proposed to be transferred has to request SEBI for the same along with 1) a declaration that it is authorised to invest on behalf of the sub-account and 2) a no-objection letter for the transfer of the sub-account from the transfered FII .
17>What is the procedure for change of local custodian?
In case of change of the local custodian of the FII / sub-account, the change should be intimated to SEBI by the FII. On receipt of no objection from the existing custodian and acceptance from the proposed custodian, the change of custodian would be approved - by SEBI.
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