Sebi strengthens disclosure requirements for foreign portfolio investors; key highlights here

Market regulator Sebi has decided to enhance the disclosure requirements for foreign portfolio investors (FPIs). The announcement was made in a meeting held on Wednesday. Also, the watchdog has tightened disclosure norms for a set of "high-risk" offshore funds coming into the local markets.

In the meeting, Sebi's board decided to enhance disclosure requirements for FPIs.

This also includes mandating additional granular-level disclosures regarding ownership, economic interest, and control of objectively identified FPIs meeting certain criteria and conditions, reported PTI.

In the case of offshore funds, Reuters reported that Sebi said, offshore funds that have invested more than 50% of their assets under management in a single group of companies and more than ₹250 billion ($3 billion) in Indian equity markets will have to disclose their investors.

However, certain investors are exempted.

These would be government-owned funds and related investors, sovereign wealth funds, pension funds, public retail funds, certain listed exchange-traded funds, corporate entities, and verified pooled investment vehicles. However, these investors will need to meet certain conditions and eventually will be exempted.

Also, these funds would require waiving privacy rights granted to them by certain jurisdictions.

Last month, Sebi has proposed that enhanced transparency measures for fully identifying all holders of ownership, economic, and control rights may be mandated for certain objectively identified high-risk FPIs that fulfil certain criteria. This would mitigate the risk of circumvention of regulations such as Minimum Public Shareholding (MPS), and to prevent potential misuse of the FPI route.

By doing so, Sebi objective is to enhance the trust in Indian securities markets by mandating additional granular disclosures around ownership of FPIs that have either concentrated single group exposures and/ or significant overall holdings in their India equity investment portfolio.

The move comes after the Adani Group's stocks rout in the first quarter of 2023, which was escalated following a Hindenburg's report. Although, the investigations in Adani's port-to-power empire did not report any wrongdoings, and the group has also denied the US-based short seller's accusations.

(With inputs from Agencies).