20 March 2024 — The Securities and Exchange Board of India (Sebi) has recently issued a circular to exempt a specific segment of foreign portfolio investors (FPIs) from the additional disclosure framework introduced last August. This move aims to streamline regulations for FPIs with concentrated holdings in one corporate group.
The circular, dated March 20, specifies that FPIs holding more than 50% of their Indian equity assets under management (AUM) in a corporate group will not need to make additional disclosures, provided they meet certain conditions. These conditions include the apex company of the corporate group having no identified promoter and the FPI’s holdings not exceeding 50% of its Indian equity AUM in the group.
Sebi’s decision, approved by its Board on March 15, ensures that custodians and depositories track the utilization of the 3% limit for apex companies without identified promoters. If this limit is met or breached, depositories must make this information public before the next trading day begins.
For FPIs meeting the 50% concentration criteria, any prospective investment in the apex company will require them to either realign their investments below the threshold within 10 trading days or make additional disclosures as per the August 2023 circular. This requirement is waived if the 3% cumulative limit for the apex company continues to be met throughout the specified period.
In Conclusion
The exemption aims to simplify regulatory procedures for FPIs while ensuring transparency and compliance within the Indian market. It reflects Sebi’s efforts to create a conducive environment for foreign investors while maintaining regulatory integrity.
