Mauritius based funds eligible for registration as Category I Foreign Portfolio Investor (FPI) with Securities and Exchange Board of India (SEBI)

Under the existing FPI Regulations in India, investment funds from non-FATF countries do not qualify for Category I license unless:
a. the fund/entity is managed by an investment manager from a FATF member country and such investment manager obtains a non-investing FPI license in India; or
b. the fund is owned at least 75% by an entity that qualifies as a Category I FPI.

As a consequence of the above restriction, investment funds from countries such as Mauritius, many Middle East countries and Cayman Islands did not qualify as Category I FPI even though the funds from such countries might be regulated.

Effective April 7, 2020, the FPI Regulations have been amended to provide that FPI applicants from a non-FATF member country can also qualify for a Category I registration provided such a country is specified by the Indian Government for this purpose or the Indian Government enters into an agreement or treaty with such country.

We are pleased to inform you that the Government of India has issued on 13 April 2020 the order specifying Mauritius as an eligible country for the purpose of granting a Category I licence to regulated funds set up in Mauritius.

With the order from Government of India, Mauritius based funds will now be able to qualify as a Category I FPI and therefore benefit from the following privileges available to Category I FPIs:

  1. Exemption from indirect share transfer provisions
  2. Higher derivative position limits
  3. Ability to issue and subscribe to Offshore derivative instruments (such as Participatory Notes or Total Return Swaps) backed by underlying Indian securities
  4. Lower KYC documentation

DM Professionals : We bring clarity from complexity !