SEBI allows sovereign funds, NRIs to buy shares directly

30 May 2008

Mumbai: The Securities and Exchange Board of India (SEBI)  has simplified norms for registration of foreign institutional investors (FIIs) and sub-accounts and allowed sovereign wealth funds, university funds, endowments and charitable trusts to register as foreign institutional investors (FIIs).

The SEBI  also decided to accord FII status to asset management companies promoted by non-resident Indians (NRIs) and allow them to buy shares in the open market, provided they do not invest in "proprietary funds".

''Asset management firms founded by overseas Indians, advisors or institutional portfolio managers in the NRI category would also be eligible to be registered as FIIs under similar conditions,'' the market regulator said in a statement.

FIIs have also been permitted to invest in collective investment schemes, where individuals and institutions collectively invest in various instruments.

To qualify as a sub-account, a foreign corporate must be listed abroad and must have assets of at least $2 billion and a track record of profits of at least $50 million in the three preceding years. Individuals who have not been Indian citizens and are seeking sub-account status must have a net worth of over $50 million.

Last year, in a bid to curb the use of participatory notes (P-notes), the market regulator had asked portfolio investors to register and help track the source of funds.