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

An FPI's custodian-DP is asked about the investment limit applicable to a single FPI (including its investor group) in the equity capital of an Indian company. Which statement reflects the rule?

A single FPI together with its investor group can hold below 10% of the company's total paid-up equity capital on a fully diluted basis. Reaching or exceeding that level is treated as foreign direct investment and not portfolio investment.

  1. ABelow 10% of the total paid-up equity capital on a fully diluted basisCorrect
  2. BUp to 49% of the paid-up equity capital for each FPI
  3. CUp to 100% as long as the company is listed
  4. DBelow 24% of the paid-up capital for each FPI individually

Explanation

A single FPI, together with its investor group, must hold less than 10% of the total paid-up equity capital on a fully diluted basis of a company. Holding 10% or more is treated as FDI. The 24% figure is the aggregate FPI limit that earlier applied, not the single-FPI limit.

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