Board Meet Outcome: Sebi tightens disclosure norms for FPIs on ownership, economic interest in firms

The Securities and Exchange Board of India (Sebi) has introduced tighter disclosure norms for foreign portfolio investors, which will prevent possible circumvention of minimum public shareholding rules or possible misuse of the FPI investment route.

This move comes against the backdrop of the allegations made by US-based Hindenburg Research against the Adani Group in late January.

The US-based short seller in its research report alleged that some FPIs held a significant stake in the listed companies of the Adani Group, but the same was denined by the group.

SEBI tightened rules to mandate additional granular level disclosures regarding ownership, economic interest, and control in any company.

These include 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 Rs 25,000 crore of equity AUM in the Indian markets.

Certain entities are exempted from making such additional disclosures, which, inter-alia, include Government and Government related investors, Pension Funds and Public Retail Funds, certain listed ETFs, corporate entities and verified pooled investment vehicles meeting certain conditions, SEBI said.

In March, PML Rules threshold requirements for identification of beneficiary were amended and currently stand at 10% for companies and trusts and 15% for partnerships and unincorporated association or body of individuals.

The board has approved changes to the FPI regulations for aligning the aforesaid eligibility criteria in the regulations, with the reduced threshold prescribed under PML Rules.