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Economy
Mahesh

27/01/24 06:46 AM IST

FPI disclosure norms deadline extended

In News
  • Foreign portfolio investors (FPIs), who are mandated to liquidate their holdings as per the Securities and Exchange Board of India’s (Sebi) January-end deadline, will get seven months more to provide additional disclosures.
SEBI guidelines
  • The new regulations required an entity of a country, sharing a land border with India or where the beneficial owner of an investment into India is situated or is a citizen of any such country, to invest only under the Government route.
  • Also, in the event of the transfer of ownership of any existing or future FDI in an entity in India, directly or indirectly, resulting in the beneficial ownership falling within the restriction/purview of the said policy amendment, such subsequent change in beneficial ownership will also require government approval.
Why these guidelines?
  • Sebi said certain FPIs have been observed to hold a concentrated portion of their equity portfolio in a single investee company/ corporate group.
  • Such concentrated investments raise the concern and possibility that promoters of such investee companies/ corporate groups, or other investors acting in concert, could be using the FPI route to circumvent regulatory requirements such as that of disclosures under Substantial Acquisition of Shares and Takeovers Regulations, 2011 (SAST Regulations) or maintaining Minimum Public Shareholding (MPS) in the listed company.
  • The regulator said while Press Note 3 or PN3 issued by the government in April 2020 does not apply to FPI investments, there are concerns that entities with large Indian equity portfolios could potentially disrupt the orderly functioning of Indian securities markets by misusing the FPI route. To mitigate these concerns, a need was felt to obtain detailed information from FPIs.
  • Sebi has said FPIs holding more than 50 per cent of their Indian equity assets under management (AUM) in a single Indian corporate group or holding over Rs 25,000 crore of equity AUM in the Indian markets are required to disclose details.
Exemption
  • FPIs who are sovereign wealth funds (SWFs), listed companies on certain global exchanges, public retail funds, and other regulated pooled investment vehicles with diversified global holdings, are exempted from making enhanced disclosures.
Source- Indian Express

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