What is the limit to invest from PIS. Can you please explain with example of particular company stock.
An NRI can purchase up to a maximum of five percent of the paid up capital of a company. Besides, NRIs collectively can hold up to a maximum of 10% of such holding or any higher percentage so permitted in respect of any particular company.
The Depositories (CDSL/NSDL) notifies a list of companies where the ceiling limit has reached and where no fresh purchases can be made. This list is called Red-flag and Breach list.
what happens if/when the limit is breached ?
If PIS will merge with FPI does this paid up capital limit will be removed ?
NRIs will not be allowed to further invest in such scrips. The above links are the consolidated stocks where the limits are breached or are almost going to be breached. If one had purchased during the time the scrip was added to such a list, the DP/bank will inform those clients to divest (sell) their holdings in these companies to reduce the limits.
Once the merger is completed and NRIs are allowed to come through the FPI route, the limits to invest will be increased as well.
what if the NRI client refuse to sell ?
There could be a penalty levied. It’s best to check with the bank when one holds their PIS account since they are responsible for the depository reporting.
Instead of invest through PIS. Can NRI form Private limited company become NSE alpha member to trade in stock ?