Ease Of Doing Biz: Sebi proposes easing additional disclosure requirements for FPIs

The Securities and Exchange Board of India has floated a consultation paper, seeking comments on its proposal to ease additional disclosure requirements for foreign portfolio investors.

Sebi proposes to exempt enhanced reporting requirements for some funds with concentrated holdings in entities with no identified promoter group, where there is no risk of breach of minimum public shareholding (MPS).

The other proposal is to exempt Category-I University Funds and University-related Endowments FPI that meet certain objective criteria from the requirement of enhanced disclosures.

The plan to ease rules comes following representations from various FPIs who sought certain relaxations in disclosure requirements.

In August last year, the capital market regulator mandated FPIs to disclose detailed information about entities holding any ownership, economic interest, or control in them, without any threshold.

The granular disclosure framework required for FPIs meeting either of the following criteria – FPIs holding over 50% of their Indian equity assets under management (AUM) in a single Indian corporate group or individually, or along with their investor group, holding more than Rs 25,000 crore of equity AUM in the Indian markets.

The regulator had reached out to industry participants seeking views on the granular disclosure framework and the relevant provisions of the FPI issued in August last year. Based on the suggestions received, the regulator floated the consultation to amend norms to promote ease of doing business.

Sebi has proposed to exempt university funds and university-related endowments, registered as Category I FPI, from the disclosure requirements provided the university’s India equity AUM is less than 25% of its global AUM, or its global AUM is more than Rs 10,000 crore.

“The AUM criteria is being prescribed to ensure that only the well-funded and diversified funds are eligible for the exemption,” Sebi said.

Further, the market regulator said as long as the composite holdings of all such FPIs in the apex company in the group are less than 3% of the total equity share capital of the company, it would be exempted from the additional disclosure requirements.

The regulator has sought comments from the public on the proposals by March 8.