Sebi may ease extra disclosure rules for foreign portfolio investors

Mumbai: India's market regulator, Sebi, is considering easing strict disclosure rules for foreign portfolio investors (FPIs). The Securities and Exchange Board of India (Sebi) is set to release a consultation paper for feedback on potential changes to the regulations that mandate FPIs over a certain asset size or with concentrated equity exposure to share detailed information about investors in their funds.

Sebi has sought input from market participants and fund custodians to rationalize the rules and ensure transparency without negatively impacting FPIs or driving them to sell shares to comply with the regulations. The proposed changes include setting a low threshold for equity holdings in a company below which FPIs would not need to disclose details of their investors, even if the fund is focused on a single firm or group.

Additionally, FPIs with concentrated investments in professionally-run companies without identifiable promoters and public sector undertakings may be exempt from additional disclosure requirements. Under the current regulations, FPIs must disclose ultimate beneficial owners if they exceed either 50% of India equity assets under management in a single company or group or have a fund size of ₹50,000 crore in Indian equities.

Sebi has previously exempted certain FPIs, such as sovereign funds, public retail funds, and university funds, from these rules. The aim is to prevent violation of minimum public shareholding regulations, avoid promotion or takeover circumvention, and block circumvention of Press Note 3, which requires government approval for investments from land-bordering countries.