exit option to REIT/ INVIT holders

SEBI has vide two identical circulars dated 17th July, 2020 made rules giving exit option to dissenting holders in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (INvIT). Dissenting unit holders means those who have not voted in favour of the resolution under regulation 22(6A) or regulation 22(8) of the SEBI (REIT) Regulations or Regulation 22(5C) or Regulation 22(7) of the SEBI (InvIT) Regulations. 

These sub regulations pertain to trustee and investment manager seeking delisting of the units and securing approval of the unit holders for the same AND change in sponsor or designated sponsor or change in control of sponsor or designated sponsor and seeking approval of the unit holders for the same. 

Under both these exit option regulations, detailed provisions have been made in respect of what acquirer and investment manager is required to do in sequential fashion, the escrow account to be created, price to be arrived at, Letter of Offer to be given, meeting to be convened of the unit holders for voting and submission of compliance report thereon. 

Copies of SEBI circular can be found 

InvIT regulations

ReIT Regulations

SEBI - relaxations

SEBI has vide its circular dated 15th July, 2020 given relaxations in respect of debt listing, listing of non convertible redeemable preference shares and commercial papers to use unaudited financials with limited review provided that these unaudited financials are not more than 6 months old. 

It has also extended the timelines for submission of quarterly/ half-yearly/ yearly financial accounts as on 31st march, 2020 to 31st July, 2020.

Those issuers who propose to list their debentures/ preference shares/ commercial papers during the month of July, 2020 can use the available financial statements as on 31st December, 2019.

Copy of SEBI circular can be found here 

Alternative Investment Funds

SEBI circular dated 5th February, 2020 on streamlining disclosure standards for Alternative Investment Funds (AIFs)

·        The said circular is based on disclosure standards for AIF which is required to be followed by all AIF.

·        Since there is a significant growth in AIF in current scenario, SEBI has taken an initiative through a Consultation Paper dated on 04^th December 2019 for inviting public opinion on “Introduction of Performance Benchmarking” and “Standardization of Private Placement Memorandum (PPM) for AIF’s”.

·        After invitation of public opinion and also after consultation and deliberation with Alternate Investment Policy Advisory Committee (AIPAC) the SEBI has finally decided to introduce templates for PPM but it shall be subject to certain exemptions and also mandatory performance benchmarking for AIF’s.

·        PPM is a primary document in which all the necessary information about the AIF is disclosed to the investors for making investment decisions. Also in order to ensure that a minimum standard of disclosure is made available in the PPM, now it has been made mandatory to provide certain minimum level of information in a simple and comparable format in accordance with the template provided.

·        Such template consists of 2 parts namely:

o   Party A- Section for minimum disclosure and

o   Part B- Supplementary section to allow full flexibility to the Fund in order to provide any additional information, which it deems fit.

·        The template for PPM of AIFs raising funds under Category I and Category II is provided at Annexure 1.The template for PPM of AIFs raising funds under Category III is provided at Annexure 2.

·        SEBI has also specified that in order to ensure compliance with the terms of PPM, it will be mandatory for AIFs to carry out an annual audit of such compliance. The audit shall be carried out by either internal or external auditor/legal professional. However, audit of sections of PPM relating to ‘Risk Factors’, ‘Legal, Regulatory and Tax Considerations’ and ‘Track Record of First Time Managers’ shall be optional.

·        In case any defect or query arises during the findings of the audit then the same shall be communicated with the Trustee or Board or Designated Partners of the AIF and SEBI.

·        It is to be noted that the terms and conditions pertaining to contribution and subscription agreement shall be in accordance with the terms and conditions of the PPM and it shall not contradict the same.

·        The requirements as mentioned above shall not be applicable to Angel Fund as defined in SEBI (AIF) Regulations 2012 and to AIF’s/Schemes in which each investor commits to a minimum capital contribution of Rs70 crores and also provides a waiver to the fund from the requirement of PPM in the SEBI prescribed template and annual audit of terms of PPM, in the manner provided at Annexure 3.

·        All the above specified requirements shall come into force with effect from 01^stMarch 2020.

·        Secondly the SEBI on receipt of industry request a proposal for performance benchmarking of AIF’s was incorporated in the above mentioned Consultation Paper.

·        Also the industry demands flexibility to showcase the performance of AIF’s based on different criteria so it has been finally decided to introduce:

o   Mandatory benchmarking of the performance of AIFs (including Venture Capital Funds) and the AIF industry.

o   A framework for facilitating the use of data collected by Benchmarking Agencies to provide customized performance reports.

·      As a result of this the following things is mandated:

o   Any association of AIFs(“Association”),which in terms of  membership, represent  at  least  51%  of  the number  of AIFs,  may notify one  or  more Benchmarking Agencies, with whom each AIF shall enter into an agreement for carrying out the benchmarking process.

o   The agreement entered between the Benchmarking Agencies and AIF’s shall cover the mode and manner of data reporting and other confidential information and etc.

o   AIFs, for all their schemes which have completed at least one year from the date of ‘First Close’, shall report all the necessary information including scheme-wise valuation and cash flow data to the Benchmarking Agencies in a timely manner.

o   Also the form and format of reporting shall be mutually decided by the Association and the Benchmarking Agencies.

o   If an applicant claims a track-record on the basis of India performance of funds incorporated overseas, it shall also provide the data of the investments of the said funds in Indian companies to the Benchmarking Agencies, when they seek registration as AIF.

o   In  the  PPM, as  well  as in any  marketing  or  promotional or  other material, where past performance of the AIF is mentioned, the  performance versus benchmark report provided by the  benchmarking   agencies for such AIF/Scheme shall also be provided.

o   In any reporting to the existing investors, if performance of the AIF/Scheme is compared to any benchmark, a copy of the performance versus benchmark report provided by the Benchmarking Agency shall also be provided for such AIF/scheme.

o   In the first step Association will appoint Benchmarking Agencies and thereafter will set timeline for reporting of requisite data to Benchmarking Agencies by all the registered AIFs. In this regard, Association and  Benchmarking Agencies  will  ensure  that  the  first  industry  benchmark  and  AIF  level performance versus Benchmark Reports are available latest by July 01, 2020, for the performance up to September 30, 2019. Further the Association shall submit  a  progress  report  in  this  regard  to  SEBI  on  a  monthly  basis  till  the creation of first industry benchmark.

·        It is to be noted that all the operational guidelines in respect of performance benchmarking are provided in Annexure 4 which is divided into 2 parts i.e. Part A and Part B.

·        In case any AIF seeks customized performance report in a particular manner other than as it was decided earlier then the same may be generated by the Benchmarking Agencies and it shall be subject to the following:

o  Consent of the AIFs, whose data needs to be considered for generation of       the customized performance report.

o  Terms and conditions, including fees, decided mutually between the Benchmarking Agencies and the AIF.

·        It is to be noted that the above mentioned requirements is not applicable in case of Angel Funds registered under sub category of Venture Capital Fund under Category I-AIF.

·           The said circular is been issued in exercise of powers mentioned under section 11(1) of SEBI Act , 1992 and also the main object behind this is to protect the interest of investors in securities and to promote and developed the securities market. 

Listing non-compliances

SEBI has issued a circular dated 22nd January 2020 standardising the fees for various non compliances by listed companies of the provisions of the Listing Obligations and Disclosure Requirements Regulations 2015. Some of the fines are indeed very steep and prohibitive and it is therefore in the company's interests to be fully compliant both in letter and spirit of the law.

https://www.sebi.gov.in/legal/circulars/jan-2020/non-compliance-with-certain-provisions-of-the-sebi-listing-obligations-and-disclosure-requirements-regulations-2015-and-the-standard-operating-procedure-for-suspension-and-revocation-of-trading-of-_45752.html

Details are in the above link. 

Rights Issues

SEBI has issued a circular dated 22nd January, 2020 streamlining the process of issue and allotment of rights shares by listed companies.

https://www.sebi.gov.in/legal/circulars/jan-2020/streamlining-the-process-of-rights-issue_45753.html

Salient features of the amendments are as follows:

1.1 The period for advance notice to stock exchange(s) under Regulation 42(2) of LODR Regulations has been reduced from at least 7 working days to at least 3 working days (excluding the date of intimation and the record date), for the purpose of rights issue.

1.2 Issuance of newspaper advertisement disclosing date of completion of dispatch and intimation of same to the stock exchanges for dissemination on their websites, as per Regulation 84 (1) of ICDR Regulations, shall be completed by the issuer at least 2 days before the date of opening of the issue.

1.3 Introduction of dematerialized Rights Entitlements (REs) –
1.3.1. In the letter of offer and the abridged letter of offer, the issuer shall disclose the process of credit of REs in the demat account and renunciation thereof.
1.3.2. REs shall be credited to the demat account of eligible shareholders in dematerialized form. 1.3.3. In REs process, the REs with a separate ISIN shall be credited to the demat account of the shareholders before the date of opening of the issue, against the shares held by them as on the record date.
1.3.4. Physical shareholders shall be required to provide their demat account details to Issuer / Registrar to the Issue for credit of REs not later than two working days prior to the issue closing date, such that credit of REs in their demat account takes place at least one day before the issue closing date.

1.4 Trading of dematerialized REs on stock exchange platform -
1.4.1. REs shall be traded on secondary market platform of Stock exchanges, with T+2 rolling settlement, similar to the equity shares. Trading in REs on the secondary market platform of stock exchanges shall commence along with the opening of the issue and shall be closed at least four days prior to the closure of the rights issue.
1.4.2. Investors holding REs in dematerialized mode shall be able to renounce their entitlements by trading on stock exchange platform or off-market transfer. Such trades will be settled by transferring dematerialized REs through depository mechanism, in the same manner as done for all other types of securities.

1.5. Payment mode - Application for a rights issue shall be made only through ASBA facility.

1.6. No withdrawal of application shall be permitted by any shareholder after the issue closing date.

LODR amendment - CMD post

SEBI has vide an amendment dated 10th January, 2020 to the Listing Obligations and Disclosure Requirements, 2015 (LODR) required that the chairperson of top 500 listed entities as per market capitalisation shall be a non executive director and not related to the MD or CEO as per the definition of relative within the Companies Act, 2013 with effect from 1st April, 2022. The earlier stipulation was that this was to be enforced from 1st April, 2020 onwards.

The relevant SEBI circular can be found here

investment advisers in IFSC

SEBI has vide its circular dated 9th January, 2020 issued operating guidelines for investment advisers in International Financial Services Centre including net worth requirements, qualifications, annual compliance audit etc.

https://www.sebi.gov.in/legal/circulars/jan-2020/operating-guidelines-for-investment-advisers-in-international-financial-services-centre_45620.html

Innovators growth platform

SEBI board meeting decision held on 21st August, 2019

Norms for permitting companies listed on the Innovators Growth Platform with an option to trade under regular category

The Board approved the norms for migration of companies listed on the Innovators Growth Platform (IGP) to regular trade category of the main board. The key proposals approved by the Board are as follows:

1. The Company should have been listed on the Innovators Growth Platform for a minimum period of one year.

2. At the time of making the application for trading under regular category of main board, the number of shareholders should be minimum 200.

3. The company should have profitability/ net worth track record of 3 years or have 75% of its capital as on the date of application for migration held by Qualified Institutional Buyers in accordance with Regulation 6(1) and 6(2) of the ICDR Regulations for main board listings.

4. Minimum promoters contribution shall be 20% which shall be locked in for 3 years. Period of earlier lock-in of 6 months served at the time of listing on IGP shall be deducted from the stipulated lock-in requirement of 3 years.

foreign portfolio investors

Decisions taken at the SEBI board meeting held on 21st August, 2019

Review of SEBI (Foreign Portfolio Investors) Regulations

The Board considered the recommendations of the working group constituted for reviewing the SEBI (Foreign Portfolio Investors) Regulations, 2014 and approved the proposed new set of Regulations.

The key focus of the proposed Regulations is to simplify and rationalize the existing regulatory framework for foreign portfolio investors (FPIs) in terms of easing the operational constraints and compliance requirements. 57 circulars and 183 FAQs pertaining to FPIs issued over the years have been merged into new regulations and a single circular. Some of the key aspects of revised regulations include:

1. To simplify and expedite the registration process and to bring about ease in compliance requirements for FPIs, the broad based eligibility criteria for institutional foreign investors has been done away with.

2. On reviewing the risk profiling of the FPIs, it is decided that the FPIs may be re-categorized into two categories - Category I and II, instead of the present requirement of three categories.

3. Registration for multiple investment manager (MIM) structures has been simplified.

4. Considering that the central banks are relatively long term, low risk investors directly/ indirectly managed by the Government, the central banks that are not the members of BIS (Bank for International Settlement) shall also be eligible for FPI registration.

5. The entities established in the international financial services center (IFSC) be deemed to have met the jurisdiction criteria for FPIs.

6. Documentation requirements for KYC have been simplified.

7. FPIs shall be permitted for off-market transfer of securities which are unlisted, suspended or illiquid, to a domestic or foreign investor.

8. Offshore funds floated by Indian Mutual Funds shall now be permitted to invest in India after obtaining registration as FPI.

9. The requirements for issuance and subscription of Offshore Derivative Instruments (ODIs) have been rationalized.

Delisting

SEBI (Delisting of Equity Shares) Regulations, 2015 has been amended vide SEBI circular dated 13th March, 2019 to allow promoter(s) / acquirer(s) to make “Counter offer”, in case price discovered through reverse book building is not acceptable to the promoter(s) / acquirer(s).

2. In order to implement the “Counter offer” process and to provide the framework, the “Timelines for Counter Offer Process” is enclosed as per Annexure – A.

3. Further, public announcement of counter offer shall also disclose the book value per share of the company.

4. Letter of offer for counter offer shall be in the abridged form containing the relevant details pertaining to the counter offer inter-alia including details of the counter offer, activity schedule etc.


Copy of the SEBI circular can be found here

foreign portfolio investors

SEBI has issued a circular dated 12th March, 2019 that all investments made by foreign portfolio investors in the debt markets shall henceforth be guided by RBI vide their guidelines on the subject. So FPI shall comply with the guidelines and instructions by RBI on this subject from time to time. But any non compliance with RBI instructions shall attract as per SEBI guidelines.

RBI has recently liberalised certain conditions for investment by FPIs in the debt markets and given more liberal limits thereto.

So does makes sense for the regulators to co-ordinate with each other and avoid duplication of regulations.

A copy of the SEBI circular can be found here

significant beneficial ownership

SEBI has vide its circular dated 12th March, 2019 modified its own circular dated 7th December, 2018 on the subject of significant beneficial ownership reporting guidelines. Basically they are aligning their regulations with those issued by MCA since MCA has modified its own guidelines in February, 2019. But the reporting format of SEBI is different from that of MCA, so I guess in case of listed companies they have to submit one format to SEBI while at the same other submit another set of format to the MCA.

Strange, and it goes under the name of "ease of doing business"

The SEBI circular can be found here

mutual funds

SEBI circular dated 8th march, 2019

Regulation 30 of SEBI (Mutual Funds) Regulations, 1996 (MF Regulations) on

Advertisement   material,

requires   Mutual   Funds   to   submit   to   SEBI,   the

advertisements issued

by

them,

within 7 days

fro

m the date of issue

.

2

.

In continuation to the various

Go Green initiatives in Mutual Funds, the Mutual

Funds are now advised to submit links to access the advertisements to be filed

under  the  MF  Regulations  by  sending  the  same  through  e

-

mail  to  SEBI  at

mf_advertisement@sebi.gov.in

.

However,    advertisement    materials    like

pamphlets may be submitted as attachment along with e

-

mail, if the size of the

attachment does not ex

ceed 250 KB.

3

.

Mutual  Funds  shall  however,

maintain  copy  of  advertisements  for  future

references.

4

.

While  sending  the  e

-

mail,  the  compliance  officer  of  respective  Mutual  Fund

shall  expressly  confirm  that  the  advertisement  is  in  compliance  with  the

Advertisement code specified in the sixth schedule

of the MF Regulations.

5

.

This circular shall come in force with immediate effect.

Regulation 30 of SEBI (Mutual Funds) Regulations, 1996 (MF Regulations) on

Advertisement   material,

requires   Mutual   Funds   to   submit   to   SEBI,   the

advertisements issued

by

them,

within 7 days

fro

m the date of issue

.

2

.

In continuation to the various

Go Green initiatives in Mutual Funds, the Mutual

Funds are now advised to submit links to access the advertisements to be filed

under  the  MF  Regulations  by  sending  the  same  through  e

-

mail  to  SEBI  at

mf_advertisement@sebi.gov.in

.

However,    advertisement    materials    like

pamphlets may be submitted as attachment along with e

-

mail, if the size of the

attachment does not ex

ceed 250 KB.

3

.

Mutual  Funds  shall  however,

maintain  copy  of  advertisements  for  future

references.

4

.

While  sending  the  e

-

mail,  the  compliance  officer  of  respective  Mutual  Fund

shall  expressly  confirm  that  the  advertisement  is  in  compliance  with  the

Advertisement code specified in the sixth schedule

of the MF Regulations.

5

.

This circular shall come in force with immediate effect.

1) Regulation 30 of SEBI (Mutual Funds) Regulations, 1996 (MF Regulations) on Advertisement material, requires Mutual Funds to submit to SEBI, the advertisements issued by them, within 7 days from the date of issue.

2. In continuation to the various Go Green initiatives in Mutual Funds, the Mutual Funds are now advised to submit links to access the advertisements to be filed under the MF Regulations by sending the same through e-mail to SEBI at mf_advertisement@sebi.gov.in. However, advertisement materials like pamphlets may be submitted as attachment along with e-mail, if the size of the attachment does not exceed 250 KB.

3. Mutual Funds shall however, maintain copy of advertisements for future references.

4. While sending the e-mail, the compliance officer of respective Mutual Fund shall expressly confirm that the advertisement is in compliance with the Advertisement code specified in the sixth schedule of the MF Regulations.

5. This circular shall come in force with immediate effect.

Copy of the said SEBI circular can be accessed here

Voluntary Retention Route

RBI circular dated 1st March, 2019 on allowing FPIs to invest in debt through the Voluntary Retention Route.

Voluntary Retention Route’ (VRR) for Foreign Portfolio Investors (FPIs) investment

Introduction

The Reserve Bank, in consultation with the Government of India and Securities and Exchange Board of India (SEBI), introduces a separate channel, called the ‘Voluntary Retention Route’ (VRR), to enable FPIs to invest in debt markets in India. Broadly, investments through the Route will be free of the macro-prudential and other regulatory norms applicable to FPI investments in debt markets, provided FPIs voluntarily commit to retain a required minimum percentage of their investments in India for a period. Participation through this Route will be entirely voluntary. The features of the Route are explained below in detail.

2. Definitions

i. ‘Committed Portfolio Size’ (CPS), for an FPI, shall mean the amount allotted to that FPI.

ii. ‘General Investment Limit’, for any one of the three categories, viz., Central Government Securities, State Development Loans or Corporate Debt Instruments, shall mean FPI investment limits announced for these categories under the Medium Term Framework, in terms of A.P. (DIR Series) Circular No. 22 dated April 6, 2018, as modified from time to time.

iii. ‘Minor violations’ shall mean violations that are, in the considered opinion of the custodians, unintentional, temporary in nature or have occurred on account of reasons beyond the control of FPIs, and in all cases are corrected on detection.

iv. ‘Related FPIs’ shall mean ‘investor group’ as defined in Regulation 23(3) of SEBI (Foreign Portfolio Investors) Regulations, 2014.

v. ‘Repo’ shall have the same meaning as defined in Section 45U (c) of RBI Act, 1934; and for the purpose of this regulation excludes repo conducted under the Liquidity Adjustment Facility and the Marginal Standing Facility.

vi. ‘Retention Period’ shall mean the time period that an FPI voluntarily commits for retaining the CPS in India.

vii. ‘Reverse Repo’ shall have the same meaning as defined in Section 45U (d) of RBI Act, 1934; and for the purpose of this regulation excludes reverse repo conducted under the Liquidity Adjustment Facility and the Marginal Standing Facility.

viii. ‘VRR-Corp’ shall mean Voluntary Retention Route for FPI investment in Corporate Debt Instruments.

ix. ‘VRR-Govt’ shall mean Voluntary Retention Route for FPI investment in Government Securities.

3. Eligible investors

Any FPI registered with SEBI is eligible to participate through this Route. Participation through this Route shall be voluntary.

4. Eligible instruments

1. Under VRR-Govt, FPIs will be eligible to invest in any Government Securities i.e., Central Government dated Securities (G-Secs), Treasury Bills (T-bills) as well as State Development Loans (SDLs). Under VRR-Corp, FPIs may invest in any instrument listed under Schedule 5 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017 notified vide Notification No. FEMA.20(R)/2017-RB dated November 07, 2017, other than those specified at 1A(a) and 1A(d) of that Schedule.
2. Repo transactions, and reverse repo transactions.

5. Features

a. Investment through this Route shall be in addition to the General Investment Limit. Investment under this route shall be capped at Rs.40,000 crore for VRR-Govt and Rs.35,000 crore for VRR- Corp per annum, or such higher amount, as may be decided by the Reserve Bank from time to time. The investment limit shall be released in one or more tranches.

b. Allocation of investment amount to FPIs under this Route shall be made on tap or through auctions. Details of the auction mechanism are given in Appendix.

c. The mode of allotment, allocation to VRR-Govt and VRR-Corp categories and the minimum retention period shall be announced by the Reserve Bank ahead of allotment.

d. No FPI (including its related FPIs) shall be allotted an investment limit greater than 50% of the amount offered for each allotment by tap or auction in case there is a demand for more than 100% of amount offered.

e. The minimum retention period shall be three years, or as decided by RBI for each allotment by tap or auction.

f. FPIs shall invest the amount allocated, called the Committed Portfolio Size (CPS) in the relevant debt instruments and remain invested at all times during the voluntary retention period, subject to the following relaxations:

1. The minimum investment of an FPI during the retention period shall be 75% of the CPS (The flexibility for modulating investments between 75%-100% of CPS is intended to enable FPIs to adjust their portfolio size as per their investment philosophy).
2. The required investment amount shall be adhered to on an end-of-day basis. For this purpose, investment shall include cash holdings in the Rupee accounts used for this Route.

g. Amounts of investment shall be reckoned in terms of the face value of securities.

6. Management of portfolio

1. Successful allottees are required to invest 25% of their CPS within one month and the remaining amount within three months from the date of allotment. The retention period will commence from the date of allotment of limit.
2. Prior to the end of the committed retention period, an FPI, if it so desires, may opt to continue investments under this Route for an additional identical retention period. In that case, it shall convey this decision to its custodian.
3. In case an FPI decides not to continue under VRR at the end of the retention period, FPI may liquidate its portfolio and exit, or it may shift its investments to the ‘General Investment Limit’. This shifting would be subject to availability of limit under the ‘General Investment Limit’.
4. FPIs that wish to liquidate their investments under the Route prior to the end of the retention period may do so by selling their investments to another FPI or FPIs. However, the FPI (or FPIs) buying such investment shall abide by all the terms and conditions applicable to the selling FPI under the Route.
5. Any violation by FPIs shall be subjected to regulatory action as determined by SEBI. FPIs are permitted, with the approval of the custodian, to regularize minor violations immediately upon notice, and in any case, within five working days of the violation. Custodians shall report all non-minor violations as well as minor violations that have not been regularised to SEBI.

7. Other relaxations

1. Investments made through the Route shall not be subject to any minimum residual maturity requirement, concentration limit or single/group investor-wise limits applicable to corporate bonds as specified in paragraphs 4(b), (e) and (f) respectively of A.P. (DIR Series) Circular No. 31 dated June 15, 2018.
2. Income from investments through the Route may be reinvested at the discretion of the FPI. Such investments will be permitted even in excess of the CPS.

8. Access to other facilities

1. FPIs investing through the Route will be eligible to participate in repos for their cash management, provided that the amount borrowed or lent under repo shall not exceed 10% of their investment under VRR.
2. FPIs investing under this route shall be eligible to participate in any currency or interest rate derivative instrument, OTC or exchange traded, to manage their interest rate risk or currency risk.

9. Other operational aspects

1. Utilisation of limits and adherence to other requirements of this Route shall be the responsibility of both the FPI and its custodian.
2. Custodians shall not permit any repatriation from the cash accounts of an FPI, if such transaction leads to the FPI’s assets falling below the minimum stipulated level of 75% of CPS during the retention period.
3. Custodians shall have in place appropriate legal documentation with FPIs that enables them (custodians) to ensure that regulations under VRR are adhered to.
4. FPIs shall open one or more separate Special Non-Resident Rupee (SNRR) account for investment through the Route. All fund flows relating to investment through the Route shall reflect in such account(s).
5. FPIs shall also open a separate security account for holding debt securities under this Route.

---

Appendix

Auction process for allocation of investment amount under VRR

The auction process for allotment of investment amounts under VRR shall be as under:

a. An FPI shall bid two variables - the amount it proposes to invest and the retention period of that investment, which shall not be less than the minimum retention period applicable for that auction.

b. FPIs are permitted to place multiple bids.

c. The criterion for allocation under each auction shall be the retention period bid in the auction.

d. Bids will be accepted in descending order of retention period, the highest first, until the amounts of accepted bids add up to the auction amount.

e. Allotment at margin (i.e., at the lowest retention period accepted), in case the amount bid at margin is more than the amount available for allotment, shall be as below:

1. The marginal bid shall be allocated partially such that the total acceptance amount matches the auction amount.
2. In case there are more than one marginal bids, allocation shall be made to the bid with the largest amount, and then in descending order of amount bid until the acceptance amount matches the auction amount.
3. In case the amount offered is the same for two or more marginal bids, the amount will be allocated equally.

f. If an FPI has been allotted multiple bids in an auction, the CPS shall be reckoned for each bid separately.

g. FPI which has got CPS allocated under an auction will be eligible to participate in subsequent auction as well.

The RBI circular can be found here