 "Sebi looks to ease offshore fund regime")
The Securities and Exchange Board of India has put out a discussion paper which seeks to ease regulatory requirements for management of offshore funds. Domestic fund houses managing regulated foreign entities' capital could soon have an easier time.
The regulator seeks to do away with requirements that mandated hiring of a separate fund manager for separate offshore schemes, and on replication of the local scheme if the local fund manager is to be used. It also seeks to potentially raise investment limits for individual entities in such funds.
The regulator has invited comments till 2nd February.
"Currently, a small proportion of Foreign Portfolio Investors (FPI) investment is being managed / advised by Indian AMCs(Asset Management Companies). Considering the long term track record of Indian mutual funds and a well developed regulatory regime, there is a significant potential for the global capital being invested in India to be managed / advised by local mutual fund managers," noted the discussion paper which mentioned a proposal on the same from the fund industry.
The regulations currently require the appointment of a separate fund manager for each separate fund. This means that an offshore fund cannot use the services of the local fund manager. This is waived if up to 70% of the portfolio is the same for the two schemes.
Sebi now seeks to do away with the requirement for appointment of a separate fund manager and for replication of the portfolio.
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Also, under the current regulations broad-based entities must have 20 investors with no one investor not accounting for more than 25% of the total pooled capital under rules for ensuring a broad base of investors. The broad-basing rule is higher (49%) under the FPI regulations.
The new rules now seem to be looking at bringing parity between the two, according to one consultant. Accordingly, the requirement for 20 investors and a maximum limit of 25% for a single investor would not apply if the investors are FPIs, said the discussion paper. This would apply to Category I and Category II FPIs, it said.