SEBI exempts certain FPIs from additional disclosure framework

In a consultation paper released on February 27, the regulator had proposed these exemptions.

The Securities and Exchange Board of India (SEBI) has exempted certain foreign portfolio investors (FPIs) from the additional disclosure framework, which was mandated through the August 24, 2023 circular.

The August circular had asked select FPIs to provide granular details regarding their beneficial ownerships, economic interest and control up to the level of all natural persons. These were FPIs, who held more than 50 percent of their Indian equity Assets Under Management (AUM) in a single Indian corporate group and those that individually or along with an investor group held more than Rs 25,000 crore of equity AUM in Indian markets.

On March 15, after a meeting with its Board, the Securities and Exchange Board of India (SEBI) announced exemptions to this mandate.

A press release from the regulator said, "The Board approved a proposal to exempt additional disclosure requirements for FPIs having more than 50 percent of their India equity AUM in a single corporate group, in case the concentrated holdings of the FPIs are in a listed company with no identified promoter if the following conditions are met:

Such FPI holds not more than 50 percent of its India equity AUM in the
corporate group, after excluding its holding in the parent company with
no identified promoter.

The composite holdings of all such FPIs (that hold in excess of the 50 percent concentration criteria and are not exempted) in the company with no identified promoter, is less than 3 percent of its total equity share capital."

The regulator had proposed these exemptions in a consultation paper released on February 27.

The paper suggested that funds with concentrated holdings in entities with no identified promoter group, and certain Category I University Funds and University Related Endowments FPIs be exempted from providing these granular details.

With listed companies without any identified promoter, the entire shareholding is classified as “public” and there is no risk of circumvention of minimum public shareholding (MPS) requirements, the paper stated.

To address concerns around Substantial Acquisition of Shares and Takeover Guidelines, further checks were suggested.

On university funds, the paper said that these funds and endowments receive contributions from various donors and the returns from such investments accrue to the University, rather than to the donors.

"Further," it stated, "such funds generally enjoy tax-exempt status in their home jurisdictions, and are therefore subject to disclosure requirements to ensure that the corpus of the fund is used for the purposes for which the fund was set up. Accordingly, University Funds and University-related Endowments that meet certain size, vintage, stature, tax status, disclosure of holdings, and broad-based holdings criteria may be exempted from the additional disclosure requirements."