Sebi to make it easier for fund managers to move to India
To make it easier for the foreign fund managers keen to relocate to India, markets regulator Sebi is considering allowing them to function as ‘Portfolio Managers’ under an easier regulatory regime.
The move assumes significance in the wake of the government already having announced taxation incentives for the offshore fund managers willing to relocate to India.
A new section in the Income Tax Act provides that the fund management activity carried out through an Eligible Fund Manager (EFM) located in India and acting on behalf of an Eligible Investment Fund (EIF) would not constitute business connection in India of such a fund.
Following the issuance of notification by the tax department in this regard, Sebi held meetings with various stakeholders to discuss the registration framework for EFMs, during which several impediments were pointed out in the existing regulations for Investment Advisers and Portfolio Managers .
Subsequently, Sebi has decided to initiate a consultation process for changes to its norms for Portfolio Managers while putting in place a framework for allowing EFMs to act as Portfolio Managers to their EIFs.
A proposal in this regard would be put up for approval of Sebi’s board next week, a senior official said.
Among the proposed measures, an existing Sebi-registered Portfolio Manager will also be allowed to act as EFM with prior intimation from Sebi and subject to certain conditions.
Sebi also plans to put in place a procedure for registration of an existing foreign-based fund manager desirous of relocating to India, or as a fresh applicant.
Such applicants will be granted registration as Portfolio Managers to act as an EFM, provided they meet existing eligibility norms of being a body corporate, having net worth of Rs 2 crore, appointment of a Principal Officer and minimum two employees with requisite credentials.
The EFMs would be required to segregate the funds and securities of the EIFs from that of other clients, provide information to Sebi on a half-yearly basis, ensure compliance to the Prevention of Money Laundering Act and other regulations.
However, EFMs would be exempted from several provisions of the PMS Regulations with respect to the EIF, and would have to comply with the applicable regulatory and disclosure requirements of the jurisdiction of the EIF.