SEBI Proposes Increasing Threshold for FPIs' Granular Disclosures to Rs50,000 Crore

Moneylife Digital Team 14 January 2025

Investor Interest

Market regulator Securities and Exchange Board of India (SEBI) proposed increasing the investment threshold set for granular disclosures about investors by foreign portfolio investors (FPIs) holding any ownership or economic interest to Rs50,000 crore from Rs25,000 crore.

Currently, some FPIs with equity assets under management (AUM) exceeding Rs25,000 crore are required to provide granular details of all their investors or stakeholders on a look-through basis.

The new norms aim to prevent the possible round-tripping by certain promoters using the FPI route, SEBI says, while introducing the framework to address concerns on circumventing MPS, press note 3 (PN3) and other norms.

"The potential to disrupt the functioning of the market has to be evaluated relative to the size of the market. In this regard, a broad market parameter such as turnover can be used as a factor to assess the size of the market," it added.

Further, the market regulator says with a view to address regulatory arbitrage with respect to offshore derivative instruments (ODIs) and FPIs with segregated portfolios, the additional disclosure framework shall also be made applicable directly to ODI subscribers and segregated portfolios of FPIs with sub-funds or separate classes of shares or equivalent structures, in terms of SEBI circular dated 17 December 2024. Accordingly, for the purpose of computing breach of size criteria, combined equity holdings or positions taken through FPI and ODI route will be considered.

SEBI also clarified that no change is being proposed in the extant threshold or treatment for the concentration criteria, which is designed to prevent circumvention of minimum public shareholding (MPS) and Substantial Acquisition of Shares and Takeovers (SAST) Regulations.

In June 2023, SEBI board approved the amendment to SEBI (FPI) regulations to guard against possible circumvention of regulations such as the requirement for MPS or disclosures under SAST and possible misuse of the FPI route to circumvent the requirements of PN3.

FPIs holding more than 50% of their Indian equity AUM in a single Indian corporate group or FPIs that individually, or along with their investor group, hold more than Rs25,000 crore of equity AUM in the Indian markets are mandated to provide additional granular level disclosures regarding ownership, economic interest and control.

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