CIRCULAR
SEBI/HO/AFD/AFD-POD-3/P/CIR/2024/152 November 11, 2024
To,
1. Foreign Portfolio Investors (“FPIs”)
2. Designated Depository Participants (“DDPs”) and Custodians
3. The Depositories
4. The Stock Exchanges and Clearing Corporations
Dear Sir / Madam,
Subject: Procedure for reclassification of FPI investment to FDI
1. Regulations 20(7) and 22(3) of the SEBI (Foreign Portfolio Investors) Regulations,
2019 provide that in case a foreign portfolio investor fails to divest its holdings (in
excess of the prescribed threshold), within five trading days, the entire investment
in the company by such foreign portfolio investor including its investor group shall
be considered as investment under the Foreign Direct Investment (“FDI”), as per
the procedure specified by the Board.
2. The procedure specified under Para 17 of Part C of Master Circular for Foreign
Portfolio Investors, Designated Depository Participants and Eligible Foreign
Investors” No. SEBI/HO/AFD/AFD-PoD-2/P/CIR/P/2024/70 dated May 30, 2024
stands modified as under:
“17. Procedure for reclassification of FPI investment to FDI
i. In case the investment made by a Foreign Portfolio Investor
(along with its investor group) reaches 10% or more of the total
paid up equity capital of a company on a fully diluted basis and
the FPI (along with its investor group) intends to reclassify its FPI
holdings as Foreign Direct Investment (FDI), it shall follow extant
FEMA Rules and circulars issued thereunder in this regard.
ii. Pursuant to receipt of such intent from the FPI, the respective
Custodian shall report the same to the Board and freeze
purchase transactions by such FPI in equity instruments of such
Indian company, till completion of the reclassification.
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iii. On receipt of request from the FPI for transfer of the equity
instruments of such Indian company from its FPI demat account
to its demat account maintained for holding FDI investments, the
Custodian shall process the request if the reporting for
reclassification, as prescribed by RBI, is complete in all respects.”
5. The provisions of this circular shall come into force with immediate effect.
6. This Circular is issued in exercise of the powers conferred under Section 11(1) of
the Securities and Exchange Board of India Act, 1992 read with Regulations 20(7),
22(3) and 44 of SEBI (Foreign Portfolio Investors) Regulations, 2019 to protect the
interest of investors in securities and to promote the development of, and to
regulate the securities market.
7. This Circular is available at www.sebi.gov.in under the link “Legal ---Circulars”.
Yours faithfully,
Aparna Thyagarajan
Chief General Manager
Alternative Investment Fund and
Foreign Portfolio Investors Department
Tel no. +91-22-26449024
Email: aparnat@sebi.gov.in
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