The Securities and Exchange Board of India (SEBI) on May 31, 2023, issued the Consultation Paper on a framework for mandating additional disclosures from Foreign Portfolio Investors (FPIs) that fulfill certain objective criteria, to guard against possible circumvention of Minimum Public Shareholding (“MPS”), and to guard against possible misuse of the FPI route to circumvent the requirements of Press Note 3 (“PN3”).
The following has been stated namely: -
• The objective is to enhance trust in the Indian securities markets by mandating additional granular disclosures around ownership of, an economic interest in, and control of objectively identified high-risk Foreign Portfolio Investors (FPIs) that have either concentrated single group exposures and/or significant overall holdings in their India equity investment portfolio.
• The following issues have been addressed namely: -
1. Concentrated group investments by FPIs and the potential circumvention of SEBI regulatory requirements such as MPS: To confirm that there is no circumvention of MPS or other related regulations, it is necessary to obtain granular information around the ownership of, an economic interest in, and control of FPIs with concentrated equity holdings in single companies or business groups.
2. Potential misuse of the FPI route for potential circumvention of Press Note 3 stipulations: There is a need to identify investors in high-risk FPIs with large equity portfolios at a granular level, whose investors may be based out of land bordering countries. In certain instances, it has been observed that while the high-risk FPI itself may be situated out of a non–land bordering country, the investors in such high-risk FPIs may be based out of the land–bordering countries.
The comments/suggestions may be provided in Ms Excel as per the prescribed format. The subject of the communication should be, “Consultation Paper on framework for mandating additional disclosures from Foreign Portfolio Investors (FPIs)”.
The comments may be sent latest by June 20, 2023, to
1. By mail - [email protected], with a copy to Mr. Arpit Anand - [email protected] and Ms. Chitra M - [email protected]
2. By post to: Shri Vikash Narnoli, Deputy General Manager, Alternative Investment Fund and Foreign Portfolio Investors Department, Securities and Exchange Board of India.
