An Explanation About QFI Qualified Foreign Investor

QFI’s Shall Include Individuals, Groups or Associations That Are:

·         . Resident in a country that is member of the Financial Action Task Force (FATF) or a country that is member of group which is a member of FATF and

·     . Resident in a country that is signatory to IOSCO’s MMOU or a signatory of a bilateral MOU with Securities and Exchange Board of India (SEBI)

An individual can invest QFI can invest up to 5 percent of the paid-up capital of a listed company. Total investment by QFI’s in a listed company cannot cross 10 per cent of its paid up capital. Foreign investors will also be allowed to acquire equity shares by way of right issue, bonus shares or equity shares on account of stock split, amalgamation, demerger or such corporate action.

The QFI investment limits will be over and above the ceilings set for FII and NRIs which are guarded by the Portfolio investment scheme for foreign investment in India.

Residents of countries like Australia, Austria, Bahrain, Belgium, Brazil, Bulgaria, Canada, China, Cyprus, Czech Republic, Estonia that are FATF complaint and are signatories of IOSCO Multilateral MOU are eligible to open QFI Demat Accounts.

 

QFIs have spectrum of fruitful investment opportunities viz:

·         Subscription of Indian mutual fund units through Demat Account mode (Direct Route) and unit Confirmation receipt.
·         Buying Indian equity shares in public issues to be listed on recognised stock exchanges in India.
·        Subcription of right issues, sales of equities under Demat system, receipts of dividends and interest payments.
·        Redemption of mutual funds units that were purchased either directly or indirectly, purchase and sale of corporate debt securities
·        Buying and selling of units of debt schemes of Indian mutual funds.

However QFI’s have certain restrictions and limits:

1.       All QFI’s can deal in Indian equity shares only

2.       No permission is granted for any QFI to issue offshore derivative instruments or participatory notes against shares of India.

3.       They can open a single noninterest bearing bank account with an Authorized dealer Category – 1 and only one demat account with any one QDP’s for buying and selling equity shares through that QDP only.

4.       Total shareholding should not cross 5% of the paid up capital of the company’s equity capital at any time with reference to each class of equity shares and

5.       Aggregate shareholdings of all QFI’s shall not cross 10% of  a company’s paid up equity capital at any time with reference to each class of equity shares

 

QFIs have to open following accounts while investing in India:

·          One particular demat account with a QDP

·         One particular Non- interest bearing Rupee account with dealers authorized for

·         Trading account with SEBI registered stock broker

·         Should have PAN

Bank account statement or copy of national or citizenship identification number or taxpayer identification number are provided as proof of identity or address proof it should be attested by persons who are deemed to do attestation in this regard. Alankit provides best support and guidance for QFI and aid them in fruitful investment in India.