Sebi on Wednesday relaxed the Know Your Clients (KYC) norms for various overseas entities including foreign institutional investors,and has done away with in-person verification requirements for non-individual clients.
The market regulator has given the clarifications on KYC norms for FIIs,sub-accounts and Qualified Foreign Investors (QFIs).
In a circular,Sebi said that foreign entities such as Sovereign Wealth Fund and overseas government agencies would not be required to provide residential and photograph,among others,to meet KYC norms.
Instead,global or local custodians of such entities can furnish a resolution from the concerned party’s board of directors and power attorney to carry out transaction.
This would be applicable for Sovereign Wealth Fund,foreign governmental agency,international or multilateral organisation and central or state government pension fund,among others. They would be part of KYC Registration Agency.
In case,the global or local custodian fails to provide the undertaking,then the intermediary can seek details from foreign investors.
Meanwhile,the market regulator has done away with personal verification requirement for non-individual clients.
Earlier,it was mandatory for all intermediaries to carry out in-person verification of their clients. In October 2011,Sebi had issued guidelines regarding the KYC norms. Later,the market regulator received representations related to operational issues in following those guidelines,especially in the case of foreign investors like FIIs and sub-accounts.
“Also,they (intermediaries) shall conduct ongoing client due diligence based on the risk profile and financial position of the clients as prescribed by Sebi,” the circular said. In case,the place of incorporation of a particular FII,QFI or sub account is not available,then the intermediary can use “registered office address/principal place of business of entity.”
“If FII or sub account does not have certificate of Incorporation or Memorandum and Articles of Association,then any reasonable equivalent legal document evidencing formation of entity may be allowed,” the circular said. The circular would be applicable for new as well as existing clients.
It has been sent to stock brokers,depository participants,mutual funds,portfolio managers,KYC Registration Agencies,Alternative Investment Funds and Collective Investment Schemes,among others.