SEBI (Foreign Institutional Investors) Regulations, 1995

provides for registration of foreign institutional investor. It lays down certain investment conditions and restrictions for a foreign institutional investor. It specifies the type of securities in which investment may be made. It lays down the general obligations and responsibilities for a foreign institutional investor whereby it has to provide for the appointment of a domestic custodian, there is a prohibition on giving advise in publicly accessible media, maintenance of proper books of account, appointment of a compliance officer and submission of the required information to the Securities and Exchange Board of India and the Reserve Bank of India. It also provides for procedure for action in case of a default.

SEBI (Foreign Venture Capital Investors) Regulations, 2000

It provides for the following: The following are the eligibility criteria for grant of a certificate of registration as per regulation 4 of SEBI (Foreign Venture Capital Investor) Regulations 2000

The applicants track record, professional competence, financial soundness, experience, general reputation of fairness and integrity.

Whether the applicant has been granted necessary approval by the Reserve Bank of India for making investments in India;

Whether the applicant is an investment company, investment trust, investment partnership, pension fund, mutual fund, endowment fund, university fund, charitable institution or any other entity incorporated outside India; or

Whether the applicant is an asset management company, investment manager or investment management company or any other investment vehicle incorporated outside India;

Whether the applicant is authorised to invest in venture capital fund or carry on activity as a foreign venture capital investor;

Whether the applicant is regulated by an appropriate foreign regulatory authority or is an income tax payer; or submits a certificate from its banker of its or its promoter’s track record where the applicant is neither a regulated entity nor an income tax payer.

The applicant has not been refused a certificate by the Board.

Whether the applicant is a fit and proper person.

Euro issues are to be treated as foreign direct investment.

Indian companies are permitted to raise foreign currency resources through issue of Foreign Currency Convertible Bonds (FCCBs) and/or issue of ordinary equity shares through Global Depository Receipts (GDRs)/American Depository Receipts (ADRs) to foreign investors i.e. institutional investors or individuals (including NRIs) residing abroad. Applications for necessary permission should be made to the Government of India, Ministry of Finance, Department of Economic Affairs, New Delhi. After obtaining the necessary approval from the Government, the Indian company should submit an application to the General Manager, Foreign Investment Division, Exchange Control Department, Reserve Bank of India, Central Office, Mumbai - 400 001 enclosing a copy of the application made to the Government and the in-principle/final approval granted by the Government, for necessary permission for issue/acquisition of shares to/by non-residents, remittance of issue expenses, opening of foreign currency accounts, etc.

It provides for the issue structure of the GDRs.