It
has been decided to allow foreign investment in the units of Investment
Vehicles registered and regulated by SEBI or any other competent authority.
Investment Vehicle will include:
•
Real
Estate Investment Trusts (REITs) registered and regulated under the SEBI
(REITs) Regulations 2014;
•
Infrastructure
Investment Trusts (InvITs) registered and regulated under the SEBI (InvITs)
Regulations, 2014;
•
Alternative
Investment Funds (AIFs) registered and regulated under the SEBI (AIFs)
Regulations 2012.
‘Unit’ shall mean beneficial interest
and shall include shares or partnership interests.
The salient features of the new
investment regime are:
i) A non resident,
including a Registered Foreign Portfolio Investor and a NRI may invest.
ii) The payment for
the units acquired by a person resident or registered / incorporated outside
India shall be made by an inward remittance or by debit to an NRE or an FCNR
account.
iii)A non resident may sell or
transfer his units in any manner or redeem the units as per regulations of SEBI
or RBI.
iv) Downstream
investment by an Investment Vehicle shall be regarded as foreign investment if
either the Sponsor or the Manager or the Investment Manager is not Indian
‘owned and controlled’.
v)
In
case the sponsors or managers or investment managers are organized in a form
other than companies or LLPs, SEBI shall determine whether it is foreign owned
and controlled or not.
vi) The extent of
foreign investment in the corpus of the Investment Vehicle will not determine
whether its downstream investment is foreign investment or not.
vii) Downstream
investment that is reckoned as foreign investment shall have to conform to the
sectoral caps and conditions as applicable to the company in which the
downstream investment is made.
viii)
Downstream
investment in an LLP that is reckoned as foreign investment has to conform to
the provisions of the Principal Regulations as well as the FDI policy.
ix) An Alternative
Investment Fund Category III with foreign investment shall make portfolio
investment in only those securities or instruments in which a RFPI is allowed
to invest.
x) The Investment
Vehicle receiving foreign investment is required to report to RBI & SEBI in
their prescribed format.
Foreign
investment in any company or partnership firm or
proprietary concern or any entity which is engaged “in real estate business, or
construction of farm houses” is prohibited. However, it is also provided that
“real estate business” shall not include development of townships, construction
of residential /commercial premises, roads or bridges. It is now clarified that
foreign investment in units of REITs registered and regulated under the SEBI
(REITs) Regulations, 2014 will not be included in “real estate business” for
the purpose of these regulations.
Based on
RBI notification dated 21/04/2016. For any further clarification please refer www.rbi.org.in ……….Poppy
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