New system for monitoring foreign investment limits in listed Indian companies: Sebi

New Delhi: The new system for monitoring foreign investment limits in listed Indian companies shall be made operational on May 01, 2018,  capital markets watchdog Sebi said in a circular on Thursday.

“The existing mechanism for monitoring the foreign investment limits shall be done away with once the new system is operationalized. RBI shall issue the necessary guidelines in this regard,” Sebi said.

Foreign Investment in India is regulated in terms the Foreign Exchange Management Act (FEMA). FEMA prescribes the various foreign investment limits in listed Indian companies. These include the aggregate FPI limit, the aggregate NRI limit and the sectoral cap.

As per FEMA, the onus of compliance with the various foreign investment limits rests on the Indian company. In order to facilitate the listed Indian companies to ensure compliance with the various foreign investment limits, SEBI in consultation with RBI has decided to put in place a new system for monitoring the foreign investment limits.

The depositories (NSDL and CDSL) shall put in place the necessary infrastructure and IT systems for operationalizing the monitoring mechanism. The Stock Exchanges (BSE, NSE and MSEI) shall also put in place the necessary infrastructure and IT systems for disseminating information on the available investment headroom in respect of listed Indian companies, Sebi said.

The system shall calculate the percentage of FPI holding in the company and the investment headroom available as at the end of the day with respect to the aggregate FPI investment limit. If the available headroom is 3% or less than 3% of the aggregate FPI investment limit, a red flag shall be activated for that company, SEBI annexure explained.