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

An FPI's aggregate holding in an Indian listed company is tracked against the sectoral cap. Which of the following is the correct position on the single-FPI investment limit in a company's total paid-up equity capital, in the absence of other approvals?

A single FPI together with its investor group can hold less than 10% of a company's total paid-up equity capital on a fully diluted basis. Beyond this, the holding is treated as FDI and must be regularised. Other percentages refer to aggregate or sectoral limits.

  1. ABelow 10% of the total paid-up equity capital on a fully diluted basis for each FPI, including its investor groupCorrect
  2. BUp to 24% for each FPI regardless of the investor group
  3. CUp to 49% for each FPI as a portfolio investor
  4. DNo limit applies to an individual FPI

Explanation

Each FPI, together with its investor group, must hold less than 10% of the total paid-up equity capital of a company on a fully diluted basis. Crossing this triggers reclassification of the holding as FDI, which must be regularised within the prescribed time. The 24% and 49% figures relate to aggregate limits and sectoral caps, not the single-FPI limit.

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