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Monday, March 17, 2008

Changes in definition of QIB under SEBI DIP Guidelines

The SEBI vide its circular dated today, National Investment Fund (NIF), a fund set up by the Government of India vide Gazette Notification no. F. No. 2/3/2005-DD-II dated November, 23, 2005 , has been included in the definition of QIB, in the SEBI (DIP) Guidelines. NIF is a fund consisting of the proceeds from disinvestment of Central Public Sector Undertakings, which would invest in equity in accordance with broad investment guidelines provided by the Government of India.

SEBI has issued necessary instructions to all registered Merchant Bankers in this regard.
Accordingly the SEBI amended the definitionof QIB to insert NIF in definition part. you can access entire text of the ciruclar at

Erstwhile definition & Understanding:
2.2.2B(v) of SEBI (DIP) Guidelines, 2000 defines ''Qualified Institutional Buyer'' shall mean:
a. public financial institution as defined in section 4A of the Companies Act, 1956;
b. scheduled commercial banks;
c. mutual funds;
d. foreign institutional investor registered with SEBI;
e. multilateral and bilateral development financial institutions;
f. venture capital funds registered with SEBI.
g. foreign Venture capital investors registered with SEBI.
h. state Industrial Development Corporations.
i. insurance Companies registered with the Insurance Regulatory and Development Authority (IRDA).
j. provident Funds with minimum corpus of Rs. 25 crores
k. pension Funds with minimum corpus of Rs. 25 crores.

Yes....analysing the definition, it uses the word "SHALL" making the following meaning, a mandatory one and very strict. Then uses the word "MEANS", so its an Exhaustive Definition (NOT an Inclusive Definition); i.e., the scope of the term is limited to extent which is listed below. So, now because of this amendment, NIF = QIB. Keep Understandin....Vj

Thanks & Regards
-- Karvy Investor Services Limited
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T.Nagar, Chennai - 600 017
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