Transaction & Regulatory Advisory Services Alert - November 2024

December 12, 2024

Transaction & Regulatory Advisory Services Alert – November 2024

In this edition we have tried to bring to your notice, the latest amendments that followed in the month of November, 2024 issued by RBI and SEBI.

RBI UPDATE

RBI unveils framework for FPI to FDI investment reclassification (November 11, 2024)

The Reserve Bank of India (RBI) has introduced an operational framework for the reclassification of investments made by Foreign Portfolio Investors (FPIs) to Foreign Direct Investment (FDI). This move is designed to address cases where an FPI, along with its investor group invests more than the pre- determined limit. Currently, FPIs are allowed to hold less than 10% of the total paid-up equity capital of an Indian company on a fully diluted basis. If this limit is breached, the FPI has the option to either divest its excess holdings or reclassify them as FDI. This reclassification must be done within five trading days from the date of settlement of the trades that caused the breach, subject to conditions set by the RBI and the Securities and Exchange Board of India (SEBI).

For more details:

https://www.financialexpress.com/market/rbi-unveils-framework-for-fpi-to-fdi-investmentreclassification-3662181/?ref=morelatest_hp

SEBI UPDATE

SEBI (Alternative Investment Funds) (Fifth Amendment) Regulations, 2024 (18 November, 2024)

SEBI has notified the SEBI (Alternative Investment Funds) (Fifth Amendment) Regulations, 2024 which shall come into force on the date of their publication in the Official Gazette. Vide this notification, SEBI has prescribed that the investors of a scheme of an Alternative Investment Fund shall have rights, pro-rata to their commitment to the scheme, in each investment of the scheme and in the distribution of proceeds of such investment, except as may be specified by the SEBI from time to time. Further provided that the rights of investors of a scheme of an Alternative Investment Fund, other than that specified above, shall be pari-passu in all aspects. The amendments have been made with an objective to clarify the regulatory intent of Alternative Investment Funds being pooled investment vehicles and to ensure fair and equal treatment of investors of an AIF.

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