FPI Granted Seven Additional Months by SEBI for Enhanced Disclosures

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.