FPI Granted Seven Additional Months by SEBI for Enhanced Disclosures

• 30 Jan 2024

SEBI recently extended the deadline for foreign portfolio investors (FPIs) to provide detailed disclosures, addressing concerns of concentrated equity portfolios.

Key Points

• SEBI's Regulatory Move: SEBI directed FPIs with over 50% AUM in a single group or holding Rs 25,000 crore in Indian equity to disclose detailed entity information.
• Objective of Additional Disclosures: Aimed at preventing misuse of FPI route by promoters to circumvent regulatory requirements and ensure market integrity.
• Granular Details Required: FPIs mandated to provide ownership, economic interest, and control details of all entities associated with them.
• Timeline for Compliance: Initially set for January 29, 2024, FPIs will get seven additional months if they miss the January deadline.
• Exempted FPI Categories: Sovereign wealth funds, listed companies on certain global exchanges, public retail funds, and regulated pooled investment vehicles are exempt from enhanced disclosures.
• Withdrawal from Domestic Market: Some experts suggest recent FPI withdrawals may be related to meeting the January deadline; FPIs sold Rs 24,734 crore worth of shares in January.
• Quantum of FPIs Affected: Initial estimates suggested Rs 2.6 lakh crore AUM may be identified as high-risk FPIs, but actual impact expected to be less.
• Government Approval Requirement: Any transfer of ownership resulting in a change in beneficial ownership under Press Note 3 necessitates government approval.