At present Mutual Funds registered with the Securities and Exchange Board of India (SEBI), are entitled to invest in American Depository Receipts (ADRs) / Global Depository Receipts (GDRs) issued by Indian companies, rated debt instruments and in the equity of overseas companies listed on a recognised overseas stock exchange with a shareholding of not less than ten percent in a listed Indian company.
In accordance with the proposal of the Finance Ministry, GOI, SEBI has vide its Circular dated 2nd August 2006, liberalized overseas investments by registered Mutual Funds by raising the existing aggregate ceiling from USD 1 billion to USD 2 billion for overseas investment by Mutual Funds with immediate effect.
Accordingly, Mutual Funds are now permitted investment in:
- ADRs/GDRs issued by Indian companies
- equity of overseas companies listed on recognized stock exchanges overseas
- rated debt securities
having an overall limit of USD 2 billion with a sub-ceiling for individual Mutual Funds which should not exceed 10% of the net assets managed by them as on March 31 of each relevant year, subject to a maximum of USD 100 million per Mutual Fund.
The requirement of listed overseas companies to have a ten percent reciprocal share holding in listed Indian companies has now been dispensed with, enabling Mutual Funds to access a larger investment stock overseas, increasing the avenues for investment.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
