Investment in Equity of Companies Registered Overseas / Rated Debt Instruments
(1)(i) Portfolio Investments by listed Indian companies
Listed Indian companies are permitted to invest up to 50 per cent of their net worth as on the date of the last audited balance sheet in (i) shares and (ii) bonds / fixed income securities, rated not below investment grade by accredited / registered credit rating agencies, issued by listed overseas companies.
(ii) Investment by Mutual Funds
Indian Mutual Funds registered with SEBI are permitted to invest within an overall cap of USD 7 billion in:
i) ADRs / GDRs of the Indian and foreign companies;
ii) equity of overseas companies listed on recognised stock exchanges overseas ;
iii) initial and follow on public offerings for listing at recognized stock exchanges overseas;
iv) foreign debt securities in the countries with fully convertible currencies, short- term as well as long-term debt instruments with rating not below investment grade by accredited/registered credit agencies;
v) money market instruments rated not below investment grade;
vi) repos in the form of investment, where the counterparty is rated not below investment grade. The repos should not, however, involve any borrowing of funds by mutual funds;
vii) government securities where the countries are rated notbelow investment grade;
viii) derivatives traded on recognized stock exchanges overseasonly for hedging and portfolio balancing with underlying as securities;
ix) short-term deposits with banks overseas where the issuer is rated not below investment grade; and
x) units / securities issued by overseas Mutual Funds or Unit Trusts registered with overseas regulators and investing in (a) aforesaid securities, (b) Real Estate Investment Trusts (REITS) listed on recognized stock exchanges overseas, or (c) unlisted overseas securities (not exceeding 10 per cent of their net assets).
(2) A limited number of qualified Indian Mutual Funds, are permitted to invest cumulatively up to USD 1 billion in overseas Exchange Traded Funds as may be permitted by SEBI.
(3) Domestic Venture Capital Funds registered with SEBI may invest in equity and equity linked instruments of off-shore Venture Capital Undertakings, subject to an overall limit of USD 500 million. Accordingly, Mutual Funds / Venture Capital Funds desirous of availing of this facility may approach SEBI for necessary permission.
(4) General permission is available to the above categories of investors for sale of securities so acquired.
