Sebi Revamps Regulations for Foreign Venture Capital Investors
The Securities and Exchange Board of India (Sebi) has introduced new regulations for foreign venture capital investors (FVCIs), aligning them with the framework for foreign portfolio investors (FPIs). This comprehensive revamp aims to ensure greater parity and streamline the registration and governance process.
Delegation to Depository Participants: FVCIs will now delegate registration and governance to designated depository participants (DDPs), similar to FPIs. This shift will reduce Sebi's direct involvement and enhance efficiency.
FVCIs must now provide details of beneficial ownership under the Prevention of Money Laundering Act, promoting transparency and accountability.
The application process will be streamlined, mirroring the FPI model. This will involve a single form for registration, permanent account number allotment, and KYC for bank and dematerialized accounts.
A renewal fee will be introduced, ensuring ongoing compliance and financial sustainability.
These changes will come into effect on January 1, 2025. Experts believe this will provide sufficient time for stakeholders to adapt and comply. The new norms are expected to enhance governance, transparency, and efficiency, aligning with Sebi's broader efforts to streamline regulatory processes.
In 2023-24, 28 new FVCIs were registered, bringing the total to 279 as of March 2024. However, 18 registrations were cancelled during the same period. Total investments by FVCIs in the Indian market increased by 12% year-on-year to Rs 53,922 crore, with the highest allocation towards information technology.