Who are basically FII?
FII – Foreign Institutional investors are bodies which put large amounts of funds and invest those money in stocks,bonds, real estate property and other investment assets like debentures, Mutual Fund, etc… They can also be operating entities that plans to invest its net income to some extent in these types of assets.
Types of typical investors include banks, insurance companies, retirement or pension funds, hedge funds, investment advisers and mutual funds. FII role in the economy is to act as highly specialized investors on behalf of others. For instance, an ordinary person will have a pension from his employer. The employer gives that person’s pension contributions to a fund. The fund will buy shares in a company, or some other financial product. Funds are useful because they will hold a broad portfolio of investments in many companies. This spreads risk, so if one company fails, it will be only a small part of the whole fund’s investment.
Institutional investors will have a lot of influence in the management of corporations because they will be entitled to exercise the voting rights in a company. FII can actively engage in corporate governance. Furthermore, because institutional investors have the freedom to buy and sell shares, they can play a large part in which companies stay solvent, and which go under. Influencing the conduct of listed companies, and providing them with capital are all part of the job of investment management.
FII Data – Foreign Institutional Investor ( FII ) Bodies
Foreign Institutional Investors (FII) include the following foreign based categories:
• Pension Funds
• Mutual Funds
• Investment Trust
• Insurance or reinsurance companies
• Investment Trusts
• Banks
• Endowments
• University Funds
• Foundations
• Charitable Trusts or Charitable Societies
• Mutual Funds
• Investment Trust
• Insurance or reinsurance companies
• Investment Trusts
• Banks
• Endowments
• University Funds
• Foundations
• Charitable Trusts or Charitable Societies
Further, following entities proposing to invest on behalf of broad based funds, are also eligible to be registered as FIIs:
• Asset Management Companies
• Institutional Portfolio Managers
• Trustees
• Power of Attorney Holders.
• Institutional Portfolio Managers
• Trustees
• Power of Attorney Holders.
FII Data- List
• The break up of FIIs in India is as follows:
1. US – 368
2. UK – 167
3. Luxembourg – 73
4. Singapore – 51
5. Australia – 35
6. Hong Kong – 35
7. Canada – 32
8. Ireland – 29
9. Netherlands – 27
10. Mauritius – 25
11. Switzerland – 22
12. France – 20
With the Indian economy looking strong in the coming years, I am sure the numbers will increase to look better.
1. US – 368
2. UK – 167
3. Luxembourg – 73
4. Singapore – 51
5. Australia – 35
6. Hong Kong – 35
7. Canada – 32
8. Ireland – 29
9. Netherlands – 27
10. Mauritius – 25
11. Switzerland – 22
12. France – 20
With the Indian economy looking strong in the coming years, I am sure the numbers will increase to look better.
FII Data – FAQ
Who is a Foreign Institutional Investor (FII)?
FII means an entity established or incorporated outside India which proposes to make investment in India.
What is a sub-account?
Sub-account includes those foreign corporations, foreign individuals, and institutions, funds or portfolios established or incorporated outside India on whose behalf investments are proposed to be made in India by a FII.
What is a Designated Bank?
Designated Bank means any bank in India which has been authorized by the Reserve Bank of India to act as a banker to FII.
Who is a Domestic Custodian?
Domestic Custodian means any entity registered with SEBI to carry on the activity of providing custodial services in respect of securities.
What is a Broad Based Fund in FII Data ?
Broad Based Fund means a fund established or incorporated outside India, which has at least twenty investors with no single individual investor holding more than 10% shares or units of the fund.
Provided that if the fund has institutional investor(s) it shall not be necessary for the fund to have twenty investors.
Provided further that if the fund has an institutional investor holding more than 10% of shares or units in the fund, then the institutional investor must itself be broad based fund.
FII Data – FII REGISTRATION
Who can get registered as FII?
Following entities / funds are eligible to get registered as FII:
1. Pension Funds
2. Mutual Funds
3. Insurance Companies
4. Investment Trusts
5. Banks
6. University Funds
7. Endowments
8. Foundations
9. Charitable Trusts / Charitable Societies
Further, following entities proposing to invest on behalf of broad based funds, are also eligible to be registered as FIIs:
1. Asset Management Companies
2. Institutional Portfolio Managers
3. Trustees
4. Power of Attorney Holders
What are the parameters on which SEBI decides FII applicants’ eligibility?
a. Applicant’s track record, professional competence, financial soundness, experience, general reputation of fairness and integrity. (The applicant should have been in existence for at least one year)
b. whether the applicant is registered with and regulated by an appropriate Foreign Regulatory Authority in the same capacity in which the application is filed with SEBI
c. Whether the applicant is a fit & proper person.
Which form needs to be filled in when applying for FII registration?
“Form A” as prescribed in SEBI (FII) Regulations, 1995.
Which documents need to be sent with “Form A”?
a. Certified copy of relevant clauses (clauses permitting the stated activities) of Memorandum of Association, Article of Association or Article of Incorporation.
b. Audited financial statement and annual report for the last one year (period covered should not be less than twelve months
How much is the fee for registration as FII?
US $ 5,000.
When is the registration fee payable?
At the time of submitting the application for registration.
What is the mode of payment?
Demand Draft in favour of “Securities and Exchange Board of India” payable at New York
How many days it takes to get registered as FII?
SEBI generally takes seven working days in granting FII registration. However, in cases where the information furnished by the applicants is incomplete, seven days shall be counted from the days when all necessary information sought, reaches SEBI.
In cases where the applicant is bank and subsidiary of a bank, SEBI seeks comments from the Reserve Bank of India (RBI). In such cases, 7 working days would be counted from the day no objection is received from RBI.
What is the registration process for FII?
Please contact us for registration.
What is the validity period of FII registration?
The FII registration is valid for 5 years. After expiry of 5 years, the registration needs to be renewed.
What is the process of renewal?
Same as initial registration. Along with “Form A” and all the relevant documents, the applicants are required to fill in additional form (Annexure 1) while applying for renewal.
Is there any renewal fee?
Yes, US $ 5,000 needs to be paid for renewal of FII registration.
When the application for renewal should be submitted
Three months before expiry of the FII registration.
What are 100 % debt FIIs/sub-accounts, and what is the process for their registration?
100 % debt FIIs are debt dedicated FIIs which invest in debt securities only. The procedure for registration of FII/sub-account, under 100% debt route is similar to that of normal funds besides a clear statement by the applicant that it wishes to be registered as FII/sub-account under 100% debt route.
Where the application for FII registration should be sent?
The FII registration application should be sent to:
Securities and Exchange Board of India
Division of FII & Custodian
Mittal Court “B” Wing, First Floor
224, Nariman Point
Mumbai 400 021
India
Division of FII & Custodian
Mittal Court “B” Wing, First Floor
224, Nariman Point
Mumbai 400 021
India
FII Data – SUB-ACCOUNT REGISTRATION FOR FII
Who can get registered as sub-account?
a. Institution or funds or portfolios established outside India, whether incorporated or not.
b. Proprietary fund of FII.
c. Foreign Corporates
d. Foreign Individuals
When is the registration fee payable?
At the time of submitting the application.
What is the mode of payment?
Demand Draft in the name of “Securities and Exchange Board of India” payable at New York
How many days it takes to get a sub-account registered?
SEBI generally takes three working days in granting FII registration. However, in cases where the information furnished by the applicants is incomplete, three days shall be counted from the days when all necessary information sought, reaches SEBI.
What is the validity period of sub-account registration?
The validity of sub-account registration is co-terminus with the FII registration under which it is registered.
What is the process of renewal of sub-account?
Same as initial registration.
Is there renewal fee?
Yes, US $ 1,000
Can OCBs / NRIs permitted to get registered as FII/sub-account?
No, they are not permitted.
FII Data – POST-REGISTRATION PROCESSES FOR FII
What is the procedure in case the FII/sub-account changes its name?
If a registered FII/sub-account undergoes name change, then the FII need to promptly inform SEBI about the change. It should also mention the reasons for the name change and give an undertaking that there has been no change in beneficiary ownership.In case of name change of FII, the request should be accompanied with documents from home regulator and registrar of the company evidencing approval of name change, and the original FII registration certificate issued by SEBI should be sent back for necessary amendment.
What is the procedure for transferring a sub-account from one FII to another?
The FII to whom the Sub-account is proposed to be transferred has to send a request along with a declaration that it is authorized to invest on behalf of the Sub-account. The transferor FII should also submit a No-objection certificate.
What is the procedure for change of domestic custodian?
The FII should send a request, along with no-objection certificate from existing domestic custodian, for change in domestic custodian.
Can FII / sub-account registration be cancelled on request?
Yes, the FII would be required to send a request for cancellation of its registration or registration of its Sub-account/s clearly mentioning the name and registration number of the entity. The FII should ensure that it / Sub-account has nil cash / securities holdings.
What if the FII does not renew its/sub-account’s registration?
The registration of the FII / Sub-account would get expired at due date and it would not be allowed to trade in Indian securities markets. If it is not interested in renewal but has certain residual assets, it can apply for disinvestment in terms of Circular No. FITTC/CUST/12/2001 dated June 04, 2001 and abide by the guidelines specified in this regard.
FII Data – INVESTMENT OPPORTUNITIES
Which financial instruments are available for FII Data?
a. Securities in primary and secondary markets including shares, debentures and warrants of companies, unlisted, listed or to be listed on a recognized stock exchange in India;
b. Units of mutual funds;
c. Dated Government Securities;
d. Derivatives traded on a recognized stock exchange;
e. Commercial papers.
What are the investment limits on equity investments by FII/sub-account?
a. FII, on its own behalf, shall not invest in equity more than 10% of total issued capital of an Indian company.
b. Investment on behalf of each sub-account shall not exceed 10% of total issued capital of an India company.
c. For the sub-account registered under Foreign Companies/Individual category, the investment limit is fixed at 5% of issued capital.
These limits are within overall limit of 24% / 49 % / or the sectoral caps a prescribed by Government of India / Reserve Bank of India.
In whose name should the securities be registered?
a. In the name of FII when making investments on its own behalf
b. In the name of sub-account when making investments on behalf of Sub-account
c. In the name of “FII a/c sub-account” when making investments on behalf of Sub-account.
