SEBI Mandates Enhance Disclosure Requirements For Certain FPIs

SEBI's new disclosure requirements include provisions regarding information on ownership and economic interests. The regulator has also tweaked rules pertaining to the eligibility criteria for FPIs.

In a bid to bring greater transparency, the Securities and Exchange Board of India (SEBI) on Friday introduced enhanced disclosure requirements for a certain class of Foreign Portfolio Investors (FPIs). The new requirements include provisions regarding information on ownership and economic interests. Notably, In June the market regulator had decided to mandate additional granular-level disclosures regarding ownership, economic interest, and control from certain FPIs.

"A foreign portfolio investor that fulfills the criteria specified by the board from time to time shall provide information or documents in relation to the persons with any ownership, economic interest or control, in the foreign portfolio investor," a SEBI notification said on Thursday, according to a PTI report. The notification amending the rules further said that the format for submitting these details or documents will follow SEBI guidelines. The regulator has also tweaked rules pertaining to the eligibility criteria for FPIs.

As of June, SEBI has specified that applicants with investors contributing a quarter (25 per cent) or greater to the funds, which are listed in the Sanctions List issued by the United Nations (UN) Security Council, are not eligible for registration as Foreign Portfolio Investors (FPIs), the report noted. 

In March, the threshold requirements to be considered a Beneficial Owner (BO) in Foreign Portfolio Investors (FPIs) were changed. The threshold now stands at 10 per cent for companies and trusts, and 15 per cent for partnerships, unincorporated associations, or groups of individuals. BOs, referring to the individuals who ultimately possess or oversee an FPI, are identified in accordance with the guidelines of the PML Rules.

In its notification on Friday, as per the report, SEBI changed rules pertaining to the eligibility criteria for FPIs. The market regulator substituted the 25 per cent or more clause with more than the threshold prescribed under the Prevention of Money Laundering (Maintenance of Records) Rules, 2005. The rules pertain to entities that are mentioned in the Sanctions List notified by the UN Security Council.

Meanwhile, in another update, SEBI has introduced a new timeline for the exit option window for mutual fund unitholders when there's a change in control of an asset management company (AMC). The modification comes in response to industry requests due to improved technological communication, enabling faster information sharing with unitholders.