The Securities and Exchange Board of India (SEBI) on November 11, 2024, issued the notification on the Procedure for reclassification of FPI investment to FDI.
The following has been stated namely: -
• Master Circular for Foreign Portfolio Investors, Designated Depository Participants and Eligible Foreign Investors” No. SEBI/HO/AFD/AFD-PoD-2/P/CIR/P/2024/70 dated May 30, 2024 shall be referred to.
• The aforesaid master circular has been amended namely: -
“17. Procedure for reclassification of FPI investment to FDI: -
i. In case the investment made by a Foreign Portfolio Investor (along with its investor group) reaches 10% or more of the total paid up equity capital of a company on a fully diluted basis and the FPI (along with its investor group) intends to reclassify its FPI holdings as Foreign Direct Investment (FDI), it shall follow extant FEMA Rules and circulars issued there under in this regard.
ii. Pursuant to receipt of such intent from the FPI, the respective Custodian shall report the same to the Board and freeze purchase transactions by such FPI in equity instruments of such Indian company, till completion of the reclassification.
iii. On receipt of request from the FPI for transfer of the equity instruments of such Indian company from its FPI demat account to its demat account maintained for holding FDI investments, the Custodian shall process the request if the reporting for reclassification, as prescribed by RBI, is complete in all respects.”
This shall come into force on November 11, 2024.
[Notification No. SEBI/HO/AFD/AFD-POD-3/P/CIR/2024/152]
