Key changes

The Circular expands the definition of Overseas Portfolio Investment (OPI) by:

1. Including investments in any instrument issued by an overseas investment fund regulated by the host jurisdiction financial sector regulator (Regulated Fund). Previously, this was limited to “units” issued by such a Regulated Fund.
2. Specifying that a Regulated Fund includes an investment fund whose activities are regulated by the host jurisdiction financial sector regulator through its fund manager. Previously, the investment fund itself had to be regulated by such a regulator.

With the latest changes, OPI includes an investment into an investment fund structured as a Singapore limited partnership or a Singapore variable capital company (in each case managed by a Singapore-regulated fund manager). Listed Indian companies and individuals resident in India (Qualifying Investors) can thus invest in such investment funds as OPIs.

To attract Qualifying Investors, regulated fund managers can now utilise Singapore structures such as limited partnerships and variable capital companies.

Conclusion

The Circular is a welcome step by the RBI to facilitate and simplify the overseas investment regime for Qualifying Investors.

Client Alert 2024-145