MUMBAI: In a relief to foreign portfolio investors (FPIs) with disproportionately high exposure to a single corporate group, the Securities and Exchange Board of India (Sebi) has decided to give them more time to comply with the new disclosure norms on beneficial owners or liquidate holdings, sources close to the development said.
In its latest move, the markets regulator has informally advised FPIs that by the end of January, the ones that exceed Sebi-defined threshold limits will get 10-30 days to make the necessary disclosures. If they fail to do so, they will get another six months to prune their holdings to admissible limits, said the source.
In the aftermath of the Adani-Hindenburg controversy, Sebi had — in August 2023 — come out with guidelines mandating FPIs with more than 50% of their Indian equity AUM in a single corporate group, or with more than Rs 25,000 crore worth of Indian stocks, to make additional disclosures related to their beneficial owners.
The standard operating procedure that custodians follow for enhanced disclosures and exemptions were first put up in October 2023. FPIs that met the criteria for enhanced disclosures as of 31 October 2023 had time till January 2024 end to rebalance their holdings if they so wished.
“If they continue to meet the criteria for enhanced disclosures as of January end, they would have an added 10/30 working days to provide the additional details required. Even thereafter, if they fail to provide any details, they would have a further 6 months to reduce their holdings,” said the person.
In addition, it is understood that FPIs that may be required to provide granular details of their beneficial ownership are significantly less than expected by Sebi earlier, sources said.
The regulator had earlier estimated that FPIs with assets under management of close to Rs 2.6 trillion would be impacted by the new disclosure norms, based on data up to March 31, 2023.
“FPIs that may be required to provide enhanced disclosures are expected to be significantly less than estimated in the consultation paper and the SEBI board note. Exemption from enhanced disclosures have been provided to FPIs that are sovereign wealth funds, listed companies on certain global exchanges, public retail funds, and other regulated pooled investment vehicles with diversified global holdings,” said another person in the know.
The sources added that there was no risk of violation of minimum public shareholding norms in concentrated FPI holdings, as regards companies with no identified or promoter.
Source: The Financial Express
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