SEBI/HO/AFD/AFD -PoD -3/P/CIR/2024/130

1 · Processing of FVCI application by DDPs

1 · 1 Engagement of DDPs by existing FVCIs

1 · 1.1 Existing FVCIs shall engage a DDP , to avail its services for conducting duediligence with respect to continuance of registration as an FVCI , by March 31, 2025. Any FVCI failing to engage a DDP by March 31, 2025 , shall not be permitted to make any further investment and shall liquidate:

1 · 1.2 Post liquidation of investments within the said time-period, the FVCI shall apply for surrender of its registration within 30 days .

1 · 2 Compliance with eligibility criteria by Existing FVCIs

1 · 2.1 The DDP engaged by the existing FVCI shall carry out registration related due diligence and assess compliance of the FVCI with eligibility criteria , within 6 months from the date of such engagement .

1 · 2.2 Existing FVCI failing to meet the eligibility criteria shall not be permitted to take fresh commitments or make new investments. Restriction on new investments shall not apply to any additional investments in its existing

1 · 2.3 In case the FVCI itself or its underlying investors contributing more than the threshold prescribed under Rule 9 of the Prevention of Money-laundering (Maintenance of Records) Rules, 2005 ("PML Rules")in the corpus of the FVCI or identified on the basis of control, come under the Sanctions List notified by the United Nations Security Council, or the FVCI is no longer a 'fit and proper' person based on the criteria specified in Schedule II to SEBI (Intermediaries) Regulations, 2008, no transaction (buy or sell) shall be permitted in the account of such FVCI and the respective DDP shall as soon as possible but not later than seven days notify such instances to SEBI .

1 · 2.4 The DDP shall be responsible for monitoring of compliance of FVCI with conditions specified above.

1 · 3 Transfer of Existing FVCI data to DDP

1 · 3.1 Upon engagement by an FVCI, the DDP may seek transfer of registration related information of the FVCI from SEBI .

1 · 4 Processing of application for registration by DDPs

1 · 4.1 FVCI applicant shall submit duly filled application form (Form-A) supported by required documents and applicable fees. The application form in original should be duly signed. If an application form is incomplete, or lacks clarity, the applicant shall be advised by the DDP to clarify or furnish the desired information within a reasonable time.

1 · 4.2 DDPs shall consider the following checks for determination of eligibility at the time of processing FVCI application:

1 · 4.2.1 Country Check - The residency status of the FVCI applicant maybe ascertained from the place of incorporation/ establishment through an appropriate document or information such as any identification / registration document issued by applicable regulator or the Income Tax authority. For due diligence, DDP may verify the country as below

1 · 4.2.2 Fit and proper person check - DDP may obtain declaration from the applicant regarding meeting the eligibility criteria specified under Regulation 4 of the FVCI Regulations and shall exercise its due diligence, as applicable.

1 · 4.2.3 Regulatory check - The DDP may verify if the applicant is regulated or supervised by the securities market regulator or banking regulator and that its registration/license granted by its regulator has not been cancelled and is still valid through any one of the following:

1 · 4.2.3.1 Obtain a copy of certificate issued by such regulator or;

1 · 4.2.3.2 verify the registration details directly from the registry or the website of such regulator.

1 · 4.2.4 Any past action taken by FVCI applicant's regulator may not necessarily render such an applicant ineligible as long as such action did not result in cancellation of its registration. Further, if an FVCI applicant, which is present in multiple jurisdictions, is suspended by one of its foreign regulators and if this suspension does not affect the entity or any of its affiliates' ability to trade in any other country around the world, DDP can consider such an applicant eligible for grant of registration subject to fulfilment of applicable eligibility requirements.

1 · 4.2.5 DDP shall mention name of its signatory(ies) in the FVCI registration approval while communicating registration approval to the FVCI .

1 · 4.2.6 DDP shall verify that identification of Beneficial owners is in accordance with Rule 9 (3) of PML Rules .

1 · 5 Continuance/renewal of Registration

1 · 5.1 An existing FVCI registered on or before December 31, 2019 shall (i) pay the renewal fee to its DDP and (ii) intimate changes in information , if any, as submitted earlier, on or before March 31, 2025 . For subsequent blocks of five years starting from January 01, 2030, such FVCIs shall (i) pay the renewal fee to its DDP and (ii) intimate changes in information, if any, as submitted earlier, at least 15 days before the completion of the previous five -year block so as to continue with their registration.

1 · 5.2 An existing FVCI registered after December 31, 2019 shall (i) pay the renewal fee to its DDP and (ii) intimate changes in information, if any, as submitted earlier , at least 15 days before the completion of five years from the date of such registration so as to continue with their registration for the subsequent block of five years .

1 · 5.3 In terms of Regulation 9(4) of the FVCI Regulations, if the foreign venture capital investor fails to pay the renewal fee for continuance of registration within the specified due date and has investment in India, such foreign venture capital investor shall pay the renewal fee as specified in Second Schedule, along with a late fee as specified Second Schedule for each day of delay in payment of renewal fee, subject to maximum of one and half times of the renewal fee .

1 · 5.4 Remittance of proceeds of such sale shall be subject to compliance with applicable KYC, AML/CFT requirements .

1 · 6 Registration Number

1 · 6.1 The DDP shall grant the certificate of registration, bearing registration number generated by SEBI.

1 · 7 Rejection of FVCI application

1 · 7.1 A DDP may consider an FVCI application that has been previously rejected by another DDP. However, before considering such an application, the DDP shall ascertain the reasons for which the application was rejected. In case the application was rejected on technical grounds, the DDP shall ensure that such deficiencies have been rectified by the applicant, before assessing the application afresh on its own merits. If the application has been rejected for any other reason, then the DDP shall assess the application on its own merit as per FVCI Regulations.

1 · 7.2 DDPs shall maintain a database of FVCI applicants. DDP shall input the details of FVCI applicants in the database. Where an FVCI application is rejected by a DDP, the DDP shall mention the reason for such rejection in the database .

1 · 8 Reporting

1 · 8.1 Every DDP shall submit to SEBI , monthly reports on applications received from FVCI applicants as per the format specified in Annexure- 1A and such other reports as may be required by SEBI. The report pertaining to a month may be submitted by DDPs to SEBI through email at fvcireport@sebi.gov.in . latest by 10th of the following month .

1 · 8.2 The DDP shall submit to SEBI monthly reports of the fees collected for all the FVCI registered by it as per the format set out in Annexure- 1B hereto through email at fvci-report@sebi.gov.in . and such other reports as may be required by SEBI.

1 · 9 Name change

1 · 9.1 In case the FVCI has undergone a change in name, the request for updation/ incorporation of a new name should be submitted by the FVCI to the DDP accompanied by documents certifying the name change. Such name change can be evidenced by:

1 · 9.2 An undertaking by the FVCI shall be given stating that it is a mere name change and does not involve change in beneficial ownership or structure.

1 · 9.3 Upon receipt of the request for name change along with abovementioned documents, the DDP shall effect the change in name in the certificate. The DDP shall issue a letter and fresh registration certificate to such applicant acknowledging the change in name.

1 · 9.4 FVCI shall as soon as possible but not later than seven working days apply for appropriate change in name in the PAN records, pursuant to its name change.

1 · 10 Surrender of Registration

1 · 10.1 DDP shall seek a "No Objection Certificate" (NOC) from the Board to process such surrender after ensuring that the holdings of the FVCI in security account and bank account is NIL .

1 · 10.2 DDP shall process such surrender applications post receipt of NOC from the Board and shall issue a confirmation to the FVCI in this regard.

1 · 10.3 While making an application to SEBI for seeking "No Objection Certificate" (NOC) for surrender, the DDP shall confirm the following with respect to the FVCI:

1 · 10.4 While processing such surrender application DDP shall ensure that:

1 · 11 Change in DDP

1 · 11.1 In case, an FVCI or its Global Custodian wishes to change the DDP, the request for change shall be forwarded to new DDP. Such request from the Global Custodian on behalf of its underlying FVCI client(s) shall be considered only if such Global Custodian has been explicitly authorized to take such steps by the FVCI .

1 · 11.2 Upon receipt of no objection from the transferor DDP, the transferee DDP shall approve the change. In case, the request for change in DDP is received from Global Custodian, the transferee DDP shall inform Compliance Officer of the FVCI regarding the change in its DDP.

1 · 11.3 Once the change of DDP is approved by the DDP, the FVCI shall transfer accounts and assets, as the case may be, to the new DDP within a period of 30 days. In case the transition does not take place within the stipulated time, the FVCI shall provide reasons for the same and seek extension from DDP for a further period of 30 days. Once the transition is complete, transferee DDP shall intimate SEBI about the change. The new and old DDPs, shall provide joint confirmation on completion of transition of data and documents to SEBI.

1 · 11.4 With respect to the process of change of DDP by an FVCI, the new DDP (i.e. transferee) may rely on the due diligence carried out by the old DDP. However, the new DDP is required to carry out adequate due diligence at the time when the FVCI applies for continuance of its registration.

1 · 12 Change in Material Information

1 · 12.1 In terms of Regulation 15A(d) of the FVCI Regulations, if there is any change in the material information previously furnished by the FVCI to the DDP and/or SEBI, which has a bearing on the certificate granted by the DDP on behalf of the Board, it shall inform the DDP and/or the Board in writing, in the following manner:

1 · 12.1.1 'Type I' material changes shall be informed by FVCI as soon as possible and within seven working-days of the occurrence of the change and the supporting documents (if any) shall be provided within 30 days of such change. This category shall include critical material changes that

1 · 12.1.2 Accordingly, the following material changes shall be considered as 'Type I' material changes:

1 · 12.1.3 'Type II' material changes, i.e., any material changes other than those considered as 'Type I' material changes, shall be informed and supporting documents (if any) shall be provided by the FVCI as soon as possible and within 30 days of such change.

1 · 12.2 The DDP shall examine all material changes informed by the FVCI and reassess the eligibility of the FVCI including requiring FVCI to seek fresh registration. However, the DDP shall mandatorily require the FVCI to seek fresh registration in case of 'Type I' material changes listed at sr. no. I to V of clause 1.12.1.2 above.

1 · 12.3 Where there is a delay in intimation of material change by the FVCI to the DDP, the DDP shall, as soon as possible but not later than two working days, inform all such cases to SEBI for appropriate action, if any, along with reason for delay.

1 · 13 Change in Status of a Compliant Jurisdiction

1 · 13.1 If a jurisdiction that was compliant at the time of grant of registration as a FVCI, becomes non-compliant subsequently, i.e. (a) ceases to be a member of IOSCO/ Bilateral Memorandum of Understanding with SEBI/ BIS or (b) becomes listed in FATF public statement as a "high risk" and "non -cooperative" jurisdiction, then the Custodian shall not allow such FVCIs to make fresh purchases until the jurisdiction/FVCI is compliant with the Regulations. The DDP shall inform to SEBI, details of such FVCIs upon such change.

1 · 13.2 However, the FVCI shall be permitted to sell the investments or continue to hold the investments already purchased by it as per the following timelines , whichever is later:

1 · 13.3 Further, in case the FVCI itself or its underlying investors contributing to the corpus of the FVCI more than the threshold as specified under Rule 9 of PML Rules or identified on the basis of control, come under the Sanctions List notified by the United Nations Security Council, no transaction (buy or sell) shall be permitted in the account of such FVCI and the respective DDP shall as soon as possible but not later than seven days notify such instances to SEBI.

1 · 14 Other Changes relating to FVCI

1 · 14.1 DDPs shall take note of the other changes such as change in Compliance Officer, change in contact details and address and update the records accordingly.

1 · 15 Miscellaneous

1 · 15.1 The existing requirement for FVCI applicants to obtain firm commitment from their investors for contribution of an amount of at least USD 1 million from investors shall no longer be applicable.

2 · 1KYC Process

2 · 2 KYC documentation requirements for FVCIs

1 · Power of Attorney having address provided to Custodian is accepted as address proof.

2 · Power of Attorney granted to Global Custodian/ local Custodian is accepted in lieu of Board Resolution. Board Resolution and the authorized signatory list is not required if SWIFT is used as a medium of instruction.

3 · UBO is not required for Government and Government related entities.

2 · 3 Sharing of KYC documents with banks towards opening of bank accounts of FVCIs

2 · 3.1 Intermediaries are advised to share the relevant KYC documents with the banks concerned based on appropriate authorization.

2 · 3.2 Accordingly, a set of hard copies of the relevant KYC documents furnished by the FVCIs to intermediaries may be transferred to the concerned bank through their authorised representative.

2 · 3.3 While transferring such documents, intermediaries shall certify that the documents have been duly verified with the original or notarised documents have been obtained, where applicable. In this regard, a proper record of transfer of documents, both at the level of the Intermediaries as well as at the bank, under signatures of the officials of the transferor and transferee entities, may be kept.

2 · 4Depository Account by Foreign Venture Capital Investor:

2 · 4.1 In case an FVCI holds separate depository accounts in both NSDL and CDSL, it is allowed to appoint only one custodian.

2 · 5Identification and verification of Beneficial Owners

2 · 5.1 Beneficial Owners (BOs) are the natural persons who ultimately own or control an FVCI and shall be identified in accordance with Rule 9 of the PML Rules . FVCIs are required to maintain a list of BOs and should provide such list of their BOs as below: -

2 · 6 Periodic KYC review

2 · 6.1 KYC review means steps taken to ensure that documents, data or information collected under the due -diligence process are kept up-to-date and relevant by undertaking reviews of existing records on a periodical basis.

2 · 6.2 At the time of KYC review, custodian may seek confirmation from FVCIs as to whether there is any change in the documents/ information provided earlier. If there is any change, the FVCI shall provide the updated documents/ information to the custodian. The periodicity for KYC review of FVCIs, based on the jurisdiction shall be as follows:

2 · 7Data security

2 · 7.1 The KYC Registration Agencies (KRAs) shall secure personal information provided with regard to beneficial owner including SMO of FVCI. Such information should be made available to intermediaries only on 'need to know basis' using an authentication method wherein an intermediary, can access the information from KRA using the authentication (similar to One Time Password "OTP") after the KRA gets confirmation from the FVCI or its Global Custodian or Investment Manager. For this purpose, KRAs need to maintain email ids of the FVCI and/ or its representative. This functionality will be optional and it shall be de -activated only upon receipt of instruction from the FVCI to KRA.

2 · 7.2 The key features of the as below:

2 · 8Period for maintenance of records

2 · 8.1 The Custodian shall maintain the KYC records in original for a minimum period of five years from the date of cessation of the transactions with the said FVCI . In case any litigation is pending, these records should be maintained till the completion of the proceedings.

2 · 9Guidelines for KYC:

2 · 9.1 Copies of all the documents submitted by the applicant shall be accompanied by originals for verification. In case the original of any document is not produced for verification, copies shall be properly attested by entities authorized for attesting the documents.

2 · 9.2 In lieu of physical attestation, certification of copies of original documents by authorized bank officials (i.e. officials of Multinational Foreign Banks or any Bank regulated by RBI) through SWIFT mechanism may be accepted for the purpose of verification of documents. The authorized bank official shall be required to send copies of original documents to the DDP digitally and certify the authenticity of these documents through authentic free format SWIFT message types (such as SWIFT MT 599) sent to the DDP.

2 · 9.3 If any proof of identity or address is in a foreign language, then translation into English is required.

2 · 9.4 Name & address of the applicant mentioned on Form, should match with the documentary proof submitted.

2 · 9.5 If more than one address is provided, proof shall be enclosed.

2 · 9.6 The Global Custodian or the Local Custodian may fill the Form, if authorized through the Power of Attorney (PoA).

2 · 9.7 In addition to information provided by the client, the intermediaries can rely on documents / information available from reliable public sources (for e.g. websites

2 · 9.8 List of people authorized to attest the documents: Notary Public, officials of Multinational Foreign Banks or any Bank regulated by Reserve Bank of India (Name, Designation & Seal should be affixed on the copy).

2 · 10 List of supporting documents: