Sebi Eases Fii Sub-Account Registration Norms

The Securities and Exchange Board of India (Sebi) has eased registration norms for sub-accounts maintained by foreign institutional investors (FIIs). According to a Sebi release, registered FIIs would be required to submit only details of the sub-account along with an undertaking and a registration fee.

A registration fee of $1,000 will be charged per sub-account. This is the first time the market watchdog has charged any fee for registration of sub-accounts for FIIs. Sebi expects to complete the procedure of registration in three working days.

The sub-account registration would have the same validity as that of the FII under which it is registered. In other words, at the time of renewal of registration, all the underlying sub-accounts would also be required to seek renewal of registration, irrespective of the date of initial registration of the sub-account.

The renewal of registration will also cost $1,000. The undertaking given by the FIIs will ensure them the sub-account. The due diligence exercise will be conducted by FIIs at their end to verify the eligibility of sub-accounts.

The Sebi (FII) Regulations, 1995, have been amended on June 30, 1998, so as to incorporate the revised procedure. A registered FII is expected to submit details and undertaking in respect of each sub-account for which it seeks registration.

According to the Sebi FII Regulations 1995, a sub-account has been defined "as those institutions, established or incorporated outside India and those funds or portfolios, established outside India, whether or incorporated or not, on whose behalf investments are proposed to be made in India by a Foreign Institutional Investor". The sub-account has to be a fund or portfolio established outside India. It has to have a broad-based fund and should possess certificate of registration with the FII through which it is applying. Every applicant in the FII category has to pay a registration fee of $10,000 for grant of a certificate under regulation 7.