Unit study guide · NISM Series III-A
SEBI (Foreign Portfolio Investors) Regulations, 2019
5 questions in this unit
What this unit covers
- Who grants a foreign portfolio investor’s registration certificate on SEBI’s behalf under the FPI framework?
- Which investor type is expressly associated with Category I foreign portfolio investors, subject to eligibility requirements?
- A foreign family office satisfies FPI eligibility requirements but does not qualify for Category I. Which category applies?
- For the individual FPI investment limit, whose holdings must be considered together with the FPI’s own holdings?
- An FPI investor group holds 9.4% of a company’s fully diluted equity capital. A proposed purchase adds 0.7%. Does this remain below the FPI limit?
Key ideas
From the practice bank · 1
Who grants a foreign portfolio investor’s registration certificate on SEBI’s behalf under the FPI framework?
A designated depository participant grants the FPI registration certificate on behalf of SEBI under the framework. Remember: FPI registration uses a designated depository participant under SEBI’s framework.
Hint Common mistake: Assuming any intermediary can independently grant an FPI certificate. Recall the specialised authorised entity in the registration process.
III-A-087From the practice bank · 2
Which investor type is expressly associated with Category I foreign portfolio investors, subject to eligibility requirements?
A foreign sovereign wealth fund is included in the Category I government-related investor group, subject to eligibility. Remember: Category depends on the investor’s qualifying nature, not merely foreign residence.
Hint Common mistake: Treating all foreign investors as one registration category. Distinguish government-related investors from the residual category.
III-A-088From the practice bank · 3
A foreign family office satisfies FPI eligibility requirements but does not qualify for Category I. Which category applies?
The family office falls in Category II when it is eligible but does not meet Category I conditions. Remember: Eligible non-Category-I investors fall within the applicable Category II framework.
Hint Common mistake: Carrying an obsolete FPI category structure into the current framework. Recall the category for eligible investors not falling within Category I.
III-A-089From the practice bank · 4
For the individual FPI investment limit, whose holdings must be considered together with the FPI’s own holdings?
The FPI’s applicable investor-group holdings are aggregated for the individual investment limit. Remember: A regulatory investment limit may apply to a group rather than a single account.
Hint Common mistake: Testing a limit account by account while ignoring required aggregation. Look for linked ownership or control rather than a shared trading venue.
III-A-090From the practice bank · 5
An FPI investor group holds 9.4% of a company’s fully diluted equity capital. A proposed purchase adds 0.7%. Does this remain below the FPI limit?
The resulting holding is 10.1%, so it is not below the 10% individual FPI-group threshold. Total = 9.4% + 0.7% = 10.1%. This question tests the threshold, not subsequent divestment or FDI treatment. Remember: Check the aggregate fully diluted holding before the proposed purchase.
Hint Common mistake: Comparing only the order size with the regulatory limit. Aggregate the existing stake and the proposed additional percentage points.
III-A-091