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Relaxing its norms for foreign investors, Sebi on Thursday allowed overseas entities using complex multi-fund structures to invest in India, if they need to use such models due to regulations in their home country and they are ready to provide details of actual beneficiary of funds.
Fearing possible round-tripping or money laundering activities, the stock market regulator, in 2010, had barred foreign entities using complex structures such as multi-class share vehicle (MCV) or protected cell companies (PCCs).
Terming such models as "opaque" structures, Sebi had asked FIIs to submit declaration and undertaking that they were not operating as PCCs, MCVs or any such equivalent structures.
However, the rules have been relaxed now after representations made by the investors that necessary safeguards can be put in place against any abuse of such structures.
In a circular issued on Thursday, Sebi said that an FII seeking registration in India would not be considered to have an "opaque" structure if it is required by its regulator or under any law to ring fence its assets and liabilities from other funds/sub-funds.
This would be subject to certain conditions, including the overseas entity being regulated in its home jurisdiction, each fund/sub-fund of the entity satisfying broad based criteria,
and the entity giving an undertaking to provide information regarding its beneficial owners as and when sought by Sebi.
PCCs are specially designed entities that might comprise of various cells, having funds of various investors, in such a manner that there is legal segregation and protection of assets and liabilities for each cell.
