SEBI tightened p-notes rules to prevent money laundering


Mumbai: Capital market regulator SEBI has strict rules to issue participatory notes (p-notes) on Thursday. The aim is to prevent abuse of the investment approach adopted by foreign investors, particularly those investors who are not registered in India. Securities Exchange board of India has announced the mandatory bonus policy of top 500 companies listed in the Indian market.

P-Notes are typically instruments issued by registered foreign institutional investors to overseas investors, who wish to invest in Indian market without registering themselves directly in India to save on time. But, they still need to go through a proper due diligence process.

Acting upon recommendations of the Supreme Court- appointed Special Investigation Team on black money; SEBI also tightened the due-diligence requirements for issuance and transfer of these instruments and put the onus on the original issuer for compliance to Anti-Money Laundering Regulations.

SEBI also made strict rules regarding the transfer of P-notes between two foreign investors.

The off-shore derivatives instruments (ODI) or P notes are issued by foreign portfolio investors. The purpose of the measures is to enhance transparency and control over issuance of P-notes, SEBI said.