Foreign portfolio investors to be subject to same tax treatment as FII’s: Sebi

The Securities and Exchange Board of India clarified on Tuesday, that foreign portfolio investors in India would be subject to the same tax treatment as foreign institutional investors.

The new rules approved by the government seek to streamline the registration process for foreign investors, the report said. Under the new rules, overseas investors would be classified into a newly created foreign portfolio investors category as long as their equity stake in a company did not exceed 10 per cent.

According to SEBI, it had received approvals from the Department of Economic Affairs and the tax department for the extension of the same tax benefits to the new class of investors.

The market regualator also approved rules announced earlier this year that would allow companies to issue debt through a self filing, along with regulations empowering Sebi to monitor the call records of investors and conduct searches of companies suspected of wrongdoing.

The approvals came following the last board meeting of SEBI in the year.

The regulator also revised rules that require initial public offerings to be graded by a credit rating agency before going to the market.

The new norms are aimed at ensuring sufficient safeguards are in place to counter any attempts at misuse of its new powers and the required privacy of individuals was granted while conducting search and seizure operations, PTI reported.

Simultaneously detailed regulations would be established for settlement of admistrative and civil proceedings in a transparent manner, while ensuring that serious offences like insider trading were kept out of settlement window.

At the meeting, discussions about matters like new Corporate Governance Code for listed companies, were also discussed including revision of insider trading norms and a new framework for Real Estate Investment Trusts (REITs).

A final decision is however, yet to be taken on corporate governance code, REITs and new insider trading norms, according to sources.

Among the seven decisions announced by Sebi after the board meeting were decisions related to validity of prospectus for one year for multiple draft offers, as also a tax treatment similar to FIIs being accorded to FPIs (Foreign Portfolio Investors), a newly created class of overseas investors.

As many as four decisions are aimed at  the  promulgation of an ordinance by the government for granting greater powers to Sebi to check the mushrooming illegal money-pooling schemes across the country and for strict actions against fraudsters and market manipulators.