My take, as quoted in MoneyControl, on why India’s easing of the PN3 framework is proving harder to use than to read. The policy fixed the definitional problem by anchoring Chinese beneficial ownership to a clear 10% threshold. However, the evidentiary backbone and the documentation around it create hurdles for Global funds with diversified LPs.
“Press Note 3 got the policy right by tying Chinese ownership to a clear 10 percent threshold under PMLA rules. The problem lies in proving it. The funds and investee companies need to certify this threshold, even though neither has the legal power to force secondary investors to reveal who they are. Furthermore, staying under 10 percent doesn’t exempt them from the process, the entity must still prove and report the linkage through its bank.”
Link to the Article: https://www.moneycontrol.com/news/business/global-pe-funds-with-chinese-lps-hit-compliance-hurdle-despite-fdi-rule-easing-14002718.html