On September 4, 2024, the Securities and Exchange Board of India (SEBI) issued a notification detailing amendments to the Securities and Exchange Board of India (Foreign Venture Capital Investors) Regulations, 2000. These amendments, effective January 1, 2025, aim to enhance the regulatory framework for foreign venture capital investors (FVCIs) in India. Key changes include:
1. Definitions and Terms:
Introduction of new definitions, including “Bilateral Memorandum of Understanding with the Board” and “designated depository participant.”
Revised definitions for terms such as "control," "certificate," and "foreign venture capital investor."
2. Application Process:
Applicants must obtain a registration certificate from a designated depository participant.
The process now mandates a complete application with specified fees and documentation.
3. Eligibility Criteria:
Applicants must be entities from countries with relevant bilateral agreements or those whose securities regulators are part of the International Organization of Securities Commission’s MMoU.
Additional criteria include the applicant’s compliance with anti-money laundering standards and fit and proper status.
4. Conditions and Responsibilities:
- FVCIs must comply with Indian laws, including the appointment of a domestic custodian and arrangements with designated banks.
- They are also required to provide regular updates and information to SEBI and maintain transparency regarding ownership and control changes.
5. Registration and Renewal:
Certificates are valid unless suspended, canceled, or surrendered.
Renewal fees must be paid every five years, with penalties for late payment.
6. Custodian Appointment:
FVCIs must enter agreements with custodians to ensure proper monitoring and reporting of investments.
7. New Regulations:
Introduction of regulations detailing obligations of FVCIs and designated depository participants, including compliance with anti-money laundering requirements and maintaining segregation of duties.
These amendments are designed to streamline the registration process, enhance regulatory oversight, and ensure greater transparency and compliance within India’s financial markets.
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