Ultimate Beneficial Ownership


As a part of the Client Due Diligence (CDD) Process under PMLA 2002 read with PMLA Rules, 2005 every SEBI registered entity, which inter alia includes Mutual Funds, is required to obtain sufficient information from their clients in order to identify and verify the identity of persons who beneficially own or control the securities account.

Further, pursuant to SEBI Master Circular No. CIR/ISD/AML/3/2010 dated December 31, 2010, on anti-money laundering standards and Guidelines on the identification of Beneficial Ownership issued by SEBI vide its Circular No. CIR/MIRSD/2/2013 dated January 24, 2013, investors (other than Individuals) are required to provide details of Ultimate Beneficial Owner(s) (“UBO(s)”) and submit proof of identity (viz. PAN with a photograph or any other acceptable proof of identity prescribed in common KYC form) of UBO(s).

In order to comply with the above Act/Rules/Regulations & Guidelines, the following CDD process is being implemented by HDFC Mutual Fund.

Applicability

•Providing information about beneficial ownership will be applicable to the subscriptions received from all categories of investors except Individuals and a Company listed on a stock exchange or is a majority-owned subsidiary of such a Company.

•Proof of Identity of the UBO such as Name/s, Address & PAN/Passport together with a self-attested copy* along with the declaration form for ‘Ultimate Beneficial Ownership’ are required submitted to HDFC AMC/its RTA.(* Original to be shown for verification and immediate return.)

•In case of any change in the beneficial ownership, the investor should immediately intimate HDFC AMC / its Registrar / KRA, as may be applicable, about such changes.

Identification Process

For Investors other than Individuals or Trusts

•If the investor is an unlisted company, partnership firm or unincorporated association / body of individuals, the beneficial owners are the natural person/s who are acting alone or together, or through one or more juridical person and exercising control through ownership or who ultimately has a controlling ownership interest.

•Controlling ownership interest means ownership of /entitlement to:
> more than 25% of shares or capital or profits of the juridical person, where juridical person is a company.
> more than 15% of the capital or profits of the juridical person, where the juridical person is a partnership firm; or
> more than 15% of the property or capital or profits of the juridical person, where the juridical person is an unincorporated association or body of individuals.

•In cases, In cases where there exists doubt as to whether the person with the controlling ownership interest is the beneficial owner or where no natural person exerts control through ownership interests, the identity details should be provided of the natural person who is exercising control over the juridical person through other means (i.e. control exercised through voting rights, agreement, arrangements or in any other manner).

•Where no natural person is identified under any of the above criteria, the person who holds the position of senior managing official shall be provided.

For Investor which is a Trust

In the case of a Trust, the settlor of the trust, the trustee, the protector, and the beneficiaries with 15% or more interest in the trust or any other natural person exercising ultimate effective control over the trust through a chain of control or ownership shall be considered as beneficial owner.

For Foreign Investors

The Know Your Client requirements in case of foreign investors viz. Foreign Institutional Investors (FIIs), Sub-accounts, and Qualified Foreign Investors (QFIs) as specified in SEBI circular no CIR/MIRSD/11/2012 dated September 5, 2012, shall be considered for the purpose of identification of beneficial ownership of the investor.
Uniform Know Your Client (KYC) Requirements

Uniform Know Your Client (KYC) Requirements

SEBI Master Circular No. CIR/ISD/AML/3/2010 dated December 31, 2010, has mandated all registered intermediaries to obtain, as part of their Client Due Diligence policy, sufficient information from their clients in order to identify and verify the identity of persons who beneficially own or control the securities account.

For the collection of information/documentation from investors/clients, SEBI has prescribed uniform Know Your Client (KYC) requirements vide circular nos. CIR/MIRSD/16/2011 dated August 22, 2011, and MIRSD/SE/Cir-21/2011 dated October 5, 2011, to be used by the concerned registered intermediaries. Further, the intermediaries are also advised to vide SEBI circular no. CIR/MIRSD/ 07 /2013 dated September 12, 2013 read with the guidance on KYC requirements issued by SEBI to follow a risk-based approach towards KYC requirements of Eligible Foreign Investors (EFI)/Foreign Portfolio Investors (FPIs) by classifying them into Category I, II and III.

SEBI has also notified the SEBI KYC Registration Agency (KRA) Regulations, 2011, and has issued guidelines under these regulations from time to time.

For details on the relevant information/supporting documents to be obtained from non-individuals, kindly click on the below links:

Relevant SEBI Circulars, Clarifications and FAQs

•    SEBI Circular No. CIR/MIRSD/16/2011 dated August 22, 2011- Simplification and Rationalization of Trading Account Opening Process
•    SEBI Circular No. MIRSD/SE/Cir-21/2011 October 5, 2011- Uniform KYC Requirements for the Securities Market
•    SEBI circular no CIR/MIRSD/11/2012 dated September 5, 2012- KYC Requirements Clarifications
•    SEBI Circular No. CIR/MIRSD/ 07 /2013 dated September 12, 2013 - Know Your Client Requirements for Eligible Foreign Investors
•    FAQs On KYC Requirements for Eligible Foreign Investors (EFIs)/Foreign Portfolio Investors (FPIs)