Sebi may ease extra disclosure rules for foreign portfolio investors

What we understand is that it wants to rationalise the rules so that the twin objective, to enhance transparency and prevent circumvention of regulations by FPIs without causing any collateral damage like driving a fund to sell shares to lower its holding, is met," a person familiar with the discussions told ET.Live EventsUBO DetailsAlso, it has been proposed that FPI with concentrated investments in professionally-run companies with no identifiable promoters and public sector undertakings should be exempted from additional disclosure requirements.

The Sebi spokesperson did not comment on the matter.Under the additional disclosure regulations, which came in the wake of US firm Hindenburg Research's allegations against the Adani Group, an FPI is required to reveal the ultimate beneficial owners, down to the last natural persons, of all investors in the fund if it crosses either of the following thresholds: (1) if more than 50% of the India equity assets under management is in a company or a single corporate group; (2) if a fund's AUM in Indian equities is ₹50,000 crore or more.

The disclosure rule also kicks in if multiple FPIs having common ownership or control together breach the limits. Some rationalisation, particularly, deciding an FPI's maximum holding in a company under which the fund could be spared from additional disclosures."Among other things, the rules are aimed at preventing violation of minimum public shareholding regulation by restraining promoters or connected entities from using FPIs to mask concentrated holdings; sidestepping takeover norms; and blocking circumvention of Press Note 3 which requires government approval for investments from land-bordering countries.(You can now subscribe to our ETMarkets WhatsApp channel)