SEBI Says Granular Disclosures For Foreign Portfolio Investors To Take Effect From Nov. 1

Additional disclosure requirements for foreign portfolio investors meeting certain objective criteria will be effective from Nov. 1.

FPIs that meet the following criteria would have to provide granular details about entities holding any ownership, economic interest, or exercising control in the FPI on a full-look-through basis, up to the level of all natural persons, the market regulator said in a circular on Thursday.

It includes:

1. FPIs holding more than 50% of their Indian equity assets under management in a single Indian corporate group;

2. FPIs that, individually or along with their investor group, hold more than Rs 25,000 crore of equity AUM in the Indian markets.

The proposals were initially approved by SEBI in its June board meeting. 

The enhanced disclosures are aimed at addressing possible circumvention of Minimum Public Shareholding and Takeover Regulations, SEBI said.

However, certain FPIs that have a broad-based, pooled structure with a wide investment base are exempt from the SEBI mandate. This includes government and government-related investors, public retail funds, exchange-traded funds with less than 50% exposure to the Indian market, and entities listed on specified exchanges in the permissible jurisdictions notified by the regulator.

FPIs that are unable to liquidate due to certain statutory restrictions, newly registered FPIs for the first 90 days, and FPIs in the process of winding up are also exempt from complying with the new disclosure regime.

However, if the FPIs are able to realign their exposure within the regulator's provided timeline, the disclosures are not necessary. An FPI that holds more than 50% AUM in a single corporate group will have 10 trading days from the date on which such FPIs exceed the threshold to bring down its exposure. Similarly, an FPI or FPI group whose exposure exceeds Rs 25,000 crore will have 90 calendar days to realign its investments.

FPIs who come out of exemption will also have a 90-day period before they have to make additional disclosures. FPIs will have 30 days to disclose the non-alignment once it exceeds the above timeline.

SEBI will also disseminate a repository containing names of companies forming a part of each Indian corporate group in order to ensure compliance with the above circular.