Jurisdiction - India
India – Capital Markets & Securities September Review

23 October, 2013


  • SEBI, by way of a circular dated July 29, 2013 (‘AIF Circular’), issued directions concerning operational, prudential and reporting norms for Alternative Investment Funds (‘AIF’). SEBI has provided certain additional requirements for Category III AIFs including risk management and compliance, redemption norms and prudential requirements. Additionally, all categories of AIFs are required to submit reports in a prescribed format to SEBI in varying frequencies, depending on whether or not such AIFs undertake leverage.


  • SEBI has, on August 8, 2013, issued the SEBI (Buy Back of Securities) (Amendment) Regulations, 2013 (‘Buy Back Amendment’) amending the SEBI (Buy Back of Securities) Regulations, 1998, which are applicable to listed Indian companies. The key changes pursuant to the Buy Back Amendment are:

i. The size of a buy back offer undertaken through the open market cannot exceed 15% or more of the paid-up capital and free reserves of a company, where previously, there was no prescribed limit;

ii. A company cannot make any offer of a buy back within a period of one year from the date of closure of a preceding offer for buy back, where previously, this restriction extended only for a period of six months;

iii. The restriction on dealing in securities of the company whose shares are the subject matter of a buy back offer during the period of such offer has been expanded to include off-market transfers, including inter se transfers of shares amongst promoters. Furthermore, the restriction will now be applicable from the date of the resolution passed by the shareholders or the board of directors of the company, as the case may be (as versus only during the offer period), up to the closing of the buy back offer; and

iv. Upon closure of a buy back offer, the company must not raise further capital for a
period of one year from such closure of the offer, except in discharge of subsisting
obligations, this restriction was also previously only for a period of six months.


  • SEBI constituted a Committee on Rationalization of Investment Routes and Monitoring of Foreign Portfolio Investments (‘Committee’) chaired by Mr K. M. Chandrasekhar, comprising representatives from the Government of India, the Reserve Bank of India (‘RBI’) and various market participants, including AZB & Partners’ Managing Partner, Ms Zia Mody. The Committee recently submitted its report containing recommendations regarding the regulatory framework for rationalisation of foreign portfolio investments. The key recommendations of the Committee include the following:

i. Creation of a single investor class of foreign portfolio investors (‘FPI’) by merging the present day foreign institutional investor (‘FII’), qualified foreign investor (‘QFI’) and non resident Indian (‘NRI’) regimes with common market entry, limit monitoring and reporting norms.

ii. Defining portfolio investments as investments by any single investor or investor group in up to 10 per cent of the equity securities of listed Indian companies and investments in non-voting securities of Indian companies, listed or not, up to prescribed levels.

iii. Simplification of entry norms and risk based know your customer (‘KYC’) for different categories of foreign portfolio investors (‘FPIs’); and

iv. Amendments of existing laws and regulations to reflect the recommendations above. Based on the recommendations of the Committee, SEBI recently approved the draft SEBI (Foreign Portfolio Investors) Regulations, 2013 incorporating the aforesaid recommendations.





For further information, please contact:


Zia Mody, AZB & Partners
[email protected]


Abhijit Joshi, AZB & Partners 
[email protected]

Shuva Mandal, AZB & Partners 

[email protected]


Samir Gandhi, AZB & Partners
[email protected]

Percy Billimoria, AZB & Partners 

[email protected]


Aditya Bhat, AZB & Partners 
[email protected]

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