INDIA INX

INDIA INX
>   Capital Market FAQ
Capital Market FAQ
The following jurisdictions will be applicable for capital market activities in the GIFT-IFSC:
  • Indian Securities laws: The SEBI Act 1992, the Securities Contracts (Regulation) Act, 1956 (42 of1956), the Depositories Act, 1996 (22 of 1996), provisions of Companies Act, 2013
  • Foreign Jurisdiction: A country other than India whose securities market regulator is a signatory to IOSCO's MMOU (International Organization of Securities Commission's Multilateral MoU) or a signatory to bilateral MoU with SEBI
Who are the participants of Capital Market?
  • Stock Exchange
  • Commodity Exchange
  • Clearing Corporation
  • Depository
  • Investment Advisor
  • Portfolio Manager
  • Alternate Investment Fund
  • Mutual Fund
Eligibility: Any Indian recognized stock exchange or any stock exchange of a foreign jurisdiction may form a subsidiary to provide the services of stock exchange in IFSC

Minimum Net Worth: Min. Net worth equivalent of INR 25 crores is required initially, which should enhance to INR 100 crores over a 3 year period
Eligibility: Any Indian recognized stock exchange or clearing corporation or any recognized stock exchange or clearing corporation of a foreign jurisdiction may form a subsidiary to provide the services of clearing corporation in IFSC

Minimum Net Worth: Min. Net worth equivalent of INR 50 cr. Initially and it should enhance to INR 300 cr. over a 3 year period
Eligibility: Any Indian registered depository or any regulated depository of a foreign jurisdiction may form a subsidiary to provide the depository services in IFSC

Shareholding limit: The depository needs to hold at least 51% of the paid-up equity share capital

Minimum Net Worth: Min. Net worth equivalent of INR 25 cr. Initially and it should enhance to INR 100 cr. Over a 3 year period
The following securities can be dealt with in the exchanges operating out of the GIFT-IFSC with a specified trading lot size on their trading platform subject to prior approval of SEBI:
  • Equity shares of a company incorporated outside India
  • Depository Receipts
  • Debt Securities issued by eligible issuers
  • Currency and interest rate derivatives
  • Index based derivatives
  • Commodities
  • Other such securities as specified by SEBI
As per SEBI circular dated November 28, 2016 contracts traded any exchanges which is FATF/IOSCO compliant.
The following clients can be provided financial services by the capital market intermediaries:
  • A person not resident in India
  • A non-resident Indian
  • A financial institution resident in India who is eligible under FEMA to invest funds offshore, to the extent of outward investment permitted
  • A person resident in India who is eligible under FEMA, to invest funds offshore, to the extent allowed under the Liberalized Remittance Scheme of Reserve Bank of India, subject to a minimum investment as specified by the Board from time to time
A portfolio manager operating in IFSC shall be permitted to invest in the following securities:
  • Securities which are listed in IFSC
  • Securities issued by companies incorporated in IFSC
  • Securities issued by companies belonging to foreign jurisdiction
The following criterions must be complied with by an issuer of debt security:
  • The issuer is eligible to issue debt securities as per its constitution
  • The issuer should not have been debarred by any regulatory authority in its home jurisdiction or any other jurisdiction, where it is operating or has raised any capital
  • The issuer or its directors should not be convicted of any economic offence in its home jurisdiction or any other jurisdiction where it is operating or has raised any capital
  • Any other criteria as may be specified by the Board
The minimum subscription amount in case of private placement per investor shall not be less than USD100, 000 or equivalent or such amount as may be specified by SEBI from time to time.
The following investors will be eligible to invest in AIFs and Mutual Funds:
  • a person resident outside India
  • a non-resident Indian
  • institutional investor resident in India who is eligible under FEMA to invest funds offshore, to the extent of outward investment permitted
  • person resident in India having a net worth of at least US Dollar one million during the preceding financial year who is eligible under FEMA to invest funds offshore, to the extent allowed in the Liberalized Remittance Scheme of Reserve Bank of India
The AIFs and mutual funds will be permitted to invest in the following securities:
  • Securities which are listed in IFSC
  • Securities issued by companies incorporated in IFSC
  • Securities issued by companies belonging to foreign jurisdiction
An asset management company of a mutual fund operating in IFSC shall have a net worth of not less than USD two million which shall be increased to USD ten million within three years of commencement of business in IFSC.
  • SEBI Guidelines on IFSC Dated March 27, 2015
  • SEBI Guidelines on IFSC Dated March 17, 2016
  • SEBI Guidelines on functioning of stock exchanges in IFSC Dated November 28, 2016
  • SEBI Guidelines on FPI/EFI Participation in IFSC Dated January 4, 2017
In the Recent budget (2016-17), GoI has provided following incentives to IFSC units.
  • No Security Transaction Tax (STT)
  • No Commodity Transaction Tax (CTT)
  • No Dividend Distribution Tax (DDT)
  • No Long Term Capital Gain Tax (LTCG)
  • No Stamp duty on Capital market transactions
  • MAT reduced to 9%
No, capital market participants cannot operate as a Branch. As per the SEBI (IFSC) Guidelines, 2015, entities desirous to start capital market activities from IFSC should open a separate company.