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NISM Certifications · NISM-Series-VI: Depository Operations · Foreign Portfolio Investors (FPI)

A SEBI-registered FPI holds 7% of the paid-up equity capital of an Indian listed company, with the rest of its portfolio unaffected. Which statement reflects the single-FPI investment limit framework?

Investment by a single FPI, together with its investor group, must remain below 10% of the company's total paid-up equity capital. Beyond that threshold the holding is treated as foreign direct investment and must be reclassified or reduced under the rules.

  1. AInvestment by a single FPI (with its investor group) must stay below 10% of the company's total paid-up equity capitalCorrect
  2. BA single FPI may hold up to 49% without any restriction
  3. CA single FPI may hold only up to 1%
  4. DThere is no limit on individual FPI holding

Explanation

Under FEMA rules, holding of an individual FPI, together with its investor group, must be below 10% of the total paid-up equity capital on a fully diluted basis. Crossing this limit means the holding is treated as FDI, with reclassification requirements. The 7% holding here is within the limit.

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