Sebi issues circular to exempt certain FPIs from additional disclosure framework

The regulator's Board had given the go ahead for this amendment on March 15.

The market regulator has issued directions to exempt a section of foreign portfolio investors (FPIs) who hold concentrated holdings in one corporate group from the additional disclosure framework issued last August.

The regulator's Board had recently, on March 15, given the go-ahead for this amendment.

In a circular dated March 20, the Securities and Exchange Board of India (Sebi) stated that an FPI having more than 50 percent of its Indian equity AUM (assets under management) in a corporate group shall not be required to make the additional disclosures as in the circular dated August 24, 2023, subject to compliance with all of the following conditions:

1.The apex company of such corporate group has no identified promoter. For this purpose, the list of corporate groups based on the corporate repository published by the Stock Exchanges and their respective apex companies having no identified promoters shall be made public by Depositories.

2. The FPI holds not more than 50 percent of its Indian equity AUM in the corporate group, after disregarding its holding in the apex company (with no identified promoter).

3. The composite holdings of all such FPIs (that meet the 50 percent concentration criteria excluding FPIs which are either exempted or have disclosed) in the apex company is less than 3 percent of the total equity share capital of the apex company.

Custodians and Depositories have been asked to track the utilisation of this 3 percent limit for apex companies, without an identified promoter, at the end of each day. When the 3 percent limit is met or breached, depositories must make this information public before start of trading on the next day.

Thereafter, for any prospective investment in the apex company by FPIs, that meet the 50 percent concentration criteria in the corporate group, the FPIs shall be required to either realign their investments below the 50 percent threshold within 10 trading days or make additional disclosures prescribed in the August 2023 circular. This, if no such requirement, to realign or make disclosure, shall be applicable unless the 3 percent cumulative limit for the apex company continues to be met through the said 10 trading days.