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

An FPI client with a demat account at a DP wants to hold Indian equity shares. Within the FPI investment framework, which holding limit applies to an individual FPI's investment in the paid-up equity capital of a single Indian company?

An individual FPI, together with its investor group, must hold below 10% of a company's total paid-up equity capital on a fully diluted basis. Crossing 10% is treated as foreign direct investment, so the higher thresholds listed do not apply to a single FPI.

  1. ABelow 10% of the total paid-up equity capital on a fully diluted basisCorrect
  2. BBelow 25% of the total paid-up equity capital
  3. CBelow 49% of the total paid-up equity capital
  4. DUp to 100% of the paid-up equity capital

Explanation

A single FPI, including its investor group, must hold less than 10% of the total paid-up equity capital of a company on a fully diluted basis. Holding of 10% or more is treated as FDI, so the larger limits are wrong for an individual FPI.

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