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TLDR:
- SEBI has introduced new rules to streamline the Foreign Venture Capital Investor registration framework.
- Designated depository participants will process applications for FVCIs and related due diligence.
The Securities and Exchange Board of India (SEBI) has introduced new rules to streamline the framework for Foreign Venture Capital Investors (FVCI) registration. The process of granting registration to FVCIs and processing post-registration references will now be handled by designated depository participants. Applicants seeking registration as an FVCI are required to engage a DDP to obtain a registration certificate. The DDP and custodian of the FVCI must be the same entity at all times. SEBI is currently processing applications for FVCIs registration and conducting related due diligence.
Under the new rules, no person can engage in securities transactions as an FVCI without obtaining a certificate granted by a designated depository participant on behalf of SEBI. FVCIs must appoint a domestic custodian to monitor their investments, submit periodic reports, and provide information to SEBI. The eligibility criteria for FVCI registration have been expanded to include resident Indians, non-resident Indians, and overseas citizens of India as constituents of the applicant, subject to certain conditions.
As of March 2023, there were 269 registered FVCIs with SEBI, with cumulative investments in investee companies amounting to Rs 48,286 crore. The new rules also mandate that FVCIs hold their investments in demat form, with amendments to the rules coming into effect from January 1, 2025. FVCIs primarily invest in unlisted securities of Venture Capital Undertakings and Venture Capital Funds.
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