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April 2012

A.P. (DIR Series) Circular No. 89, dated 1-3-2012 — Foreign Institutional Investor (FII) investment in ‘to be listed’ debt securities.

By Gaurang Gandhi, Chartered Accountant
Reading Time 1 mins
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Presently, SEBI registered FII are allowed to invest only in listed non-convertible debentures (NCD)/ bonds issued by an Indian company.

This Circular permits SEBI registered FII/sub-accounts of FII to invest in primary issues of to be listed NCD/ bonds only if listing of such NCD/bonds is committed to be done within 15 days of such investment. In case the NCD/bonds are not listed within 15 days of issuance, then the FII/sub-account of FII must immediately dispose of these NCD/bonds either by way of sale to a third party or to the issuer. The terms of offer must contain a clause stating that the issuer will immediately redeem/buy back the said securities from the FII/sub-accounts of FII if they are not listed within 15 days of issuance.

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