Jurisdiction - India
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India – Capital Markets & Securities Updates.


23 October, 2014

  • On September 26, 2014, the Securities and Exchange Board of India (‘SEBI’) notified the SEBI (Real Estate Investment Trusts) Regulations, 2014, (‘REITs Regulations’). The REITs Regulations govern the setting up and operations of a real estate investment trust i.e., a trust set up under the provisions of the Indian Trusts Act, 1882, and registered with SEBI under the REITs Regulations. Please refer to the ‘Inter Alia…Special Edition’ of October 2014 (which will be circulated shortly), for further details.
  • On July 17, 2014, SEBI notified the SEBI (Infrastructure Investment Trusts) Regulations, 2014.
  • SEBI has, on July 7, 2014 and September 11, 2014, released a revised set of frequently asked questions (‘FAQs’) with respect to the SEBI (Foreign Portfolio Investors) Regulations, 2014 (‘FPI Regulations’). Some key issues clarified by the FAQs are as follows:

i. Where an existing sub-account, which is unregulated, wishes to convert itself as a Category II Foreign Portfolio Investor (‘FPI’) on the basis that its investment manager is regulated and registered as a Category II FPI, it is sufficient that such investment manager is registered as a ‘foreign institutional investor’ (‘FII’) (and is therefore a deemed FPI) and it is not necessary that the investment manager convert itself as an FPI prior to the sub-account obtaining such registration.


ii. With respect to applicants seeking registration as FPIs and belonging to the bank category, the requirements under Regulations 4 (eligibility criteria of FPI) and 5 (categories of foreign portfolio investor) of the FPI Regulations are distinct and independent. Accordingly, although under Regulation 4 of the FPI Regulations, the applicant is required to be resident in a country whose central bank is a member of the Bank for International Settlements (‘BIS’), for the purposes of Regulation 5 of the FPI Regulations, the applicant will be considered ‘appropriately regulated’ even if it is regulated by a unified financial sector regulator or banking regulator, which is not a member of the BIS.


iii. Non-Resident Indians (‘NRIs’) and Persons of Indian Origin (‘PIOs’) are not eligible

to make investments as FPIs under the FPI Regulations. Further, a company that is

majority owned by one or more NRIs or PIOs is also prohibited from making investments

as an FPI. However, SEBI has stated that if such company is appropriately regulated,

it may register as a Category II FPI for the purpose of acting as an investment

manager for other FPIs.


iv. The compliance officer to be appointed by FPIs under FPI Regulations need not be an employee of the concerned FPI.


v. Further, all Category III FPI applicants will be required to furnish to the Designated

Depository Participant, a certificate from their banks confirming that the applicant

has maintained a satisfactory banking relationship for more than a year. It will not be

possible for such an FPI to rely on the track record of its investment manager or its

parent or group company for meeting such requirement.



  • SEBI, has released a discussion paper on the amendment of Clause 36 of the Equity Listing Agreement (‘EL Agreement’), inviting public comments (‘Discussion Paper’). The Discussion Paper seeks to review the continuous disclosure regime for listed companies in India, and provide appropriate regulatory framework to assist listed entities in complying with their proposed disclosure obligations under the EL Agreement.



Clause 36 of the EL Agreement has not been amended since it was first incorporated in April, 1998. In its present form, Clause 36 requires a listed entity to disclose to the stock exchange(s) details of all events that will have a bearing on the performance/operations of the listed entity as well as price-sensitive information (‘PSI’). This Clause only highlights certain ‘material events’, which are indicative and broad in nature and it leaves it to the discretion of the listed entity to determine whether an event is material or whether any information will qualify as PSI, which has inadvertently resulted in inadequate disclosure levels in the stock market.


The Discussion Paper has restructured the current disclosure regime providing greater
clarity and detail by, inter alia: (i) listing events that are deemed to be ‘material events’ (and accordingly require disclosure) such as change in the general character of business, acquisitions, mergers, issuance or forfeiture of securities; (ii) providing guidelines for materiality (and providing both quantitative and qualitative factors for such determination) and PSI (which is based on the reasonable investor test); and (iii) providing an indicative list of information that is required to be disclosed upon the occurrence of specific events and information that are material/price sensitive.




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]


AZB & Partners Capital Markets Practice Profile in India



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