Clarification on clubbing of investment limits of Foreign Portfolio Investors ("FPIs") dated 13th December 2018

1. Strictly Private and Confidential
Clarification on clubbing
of investment limits of
Foreign Portfolio Investors
("FPIs")
December 13, 2018
SEBI has overturned the earlier circulars No. CIR/IMD/FPIC/CIR/P/2018/64 dated April 10, 2018 on Know Your Client
(KYC) requirements for Foreign Portfolio Investors (FPIs) and No. SEBI/HO/IMD/FPIC/ CIR/P/2018/66 dated April 10,
2018 to the extent of the following:
What does the Circular say:
 Clubbing of investment limit shall be on the basis of common control* or common ownership of more than
50%
 *Control includes the right to appoint majority of the directors or to control the management or policy
decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including
by virtue of shareholding or management rights or shareholders’ agreements or voting agreements or in any
other manner.

2. Strictly Private and Confidential
Clubbing of investment limit No clubbing of investment limit
Two or more FPIs including foreign
Governments/ their related entities having
direct or indirect common ownership of
more than 50% or control
Regulated Public Retail Funds such as Mutual funds, Unit Trusts,
Insurance Companies, Pension Funds (not catering to specific
investor type)
Foreign Government agencies to be
clubbed with the foreign Government/ its
related entities for the purpose of
calculation of 10% limit in a single
company, if forming part of an investor
group.
Public Retail Funds majority owned by regulated Public Retail
Funds on look through basis
-
Public Retail Funds having regulated Investment Managers
-
Government of India entering into agreements or treaties with
other sovereign Governments recognizing certain entities to be
distinct and separate
-
Investment by foreign Government/ its related entities from
provinces/ states of countries with federal structure having
different ownership and control.
How to remedy the Breach?
1. Divest the holding within five trading days from the date of settlement of the trades to bring shareholding below
10% of the paid up capital of the company, or
2. The said investments to be treated as Foreign Direct Investment from the date of breach.
Link of the Circular :(https://www.sebi.gov.in/legal/circulars/dec-2018/clarification-on-clubbing-of-investment-limits-
of-foreign-portfolio-investors-fpis-_41281.html)
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Page 2
Clarification on clubbing
of investment limits of
Foreign Portfolio Investors
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