Foreign Portfolio Investment SEBI Registration

FPI Registration: SEBI Introduces Common Application Form

Securities and Exchange Board of India had come to a decision on Tuesday that they will go on further with their reform measures on Foreign Portfolio Investors (FPIs) when the market managers announced the much-awaited common application form. With this step, SEBI is trying to make the FPI registration process easy.

As per the current scenario, FPIs have to make two separate applications for a Permanent Account Number (PAN), one to SEBI and the other one to the Central Board of Direct Tax (CBDT). With this form, the government is trying to put an end on the dual application requirement. The new changes in the FPI registration process will naturally reduce the processing time of foreign investors. Because of the dual application procedure, the whole FPI registration process would take around three months to complete.

Tejesh Chitlangi, a senior partner at IC Universal Legal, said, “The notifications of long-awaited Common Application Form for FPIs shall pave the way for FPIs to have seamless access to Indian capital markets, while during timelines and enhancing operational flexibility.” 

The government has announced the new application form on 27 January; however, SEBI notified about it on 4 February. 

SEBI person with the direct knowledge on the matter, made a statement, “The delay is because the earlier notification was based on 2014 FPI regulations. It was rectified to August 2019 the new FPI regime. SEBI has notified the rectified and revised norms.”

The ten pages long-form is much easier to navigate.  The form is the result of the combination of three forms- information needed by the tax department, SEBI requirements, and documents needed by the Foreign Account Tax Compliance Act (FATCA).

An FPI compliance officer who didn’t want to be named said, “The regulators should look at refining this process for easy market access. A dual filing would be as good as what FPIs had to face earlier.”

The current amendments have classified FPIs into two categories. Earlier, FPI had fallen under three categories, with the easier compliance norms for Category –I FPIs and the strict norms for Category-III FPIs.

The new rule has listed the government and government-related investors such as central banks, international or multilateral organizations sovereign wealth funds, entities which are directly or indirectly managed by the government, pension and University funds under Category –I FPIs.

Entities such as insurance or reinsurance entities, banks, investment managers, portfolio managers, asset management companies, investment advisors, swap dealers, broker-dealers also fall under the Category-I.

All the investors who are not qualified under Category-I fall under the Category –II FPIs, such as foreign portfolio investors, charitable organizations, endowments and foundations, family offices, corporate bodies, properly regulated entities which operate on behalf of their clients and unregulated funds in the form of limited partnership and trusts.

The government has been working on the idea of FPI registration common application form from the past three years, but due to mundane grounds, it always failed to conclude. But this time the government has launched the common application form by providing all the crucial details in one form.

Also Read: Things to know before investing via Foreign Portfolio Investment (FPI) Route in India