• IND SEBI issued a circular on mandating additional disclosures by foreign portfolio investors (FPIs) that fulfill certain objective criteria.
• Pursuant to Regulations 22 (6) and 22 (7) under SEBI (FPI) Regulations, 2019, vide SEBI (Foreign Portfolio Investors) (Second Amendment) Regulations, 2023.

Criteria

• FPIs with over 50% of equity assets in a single corporate group must provide detailed information on all entities with ownership, economic interest, or control rights.
• Also FPIs that individually or along with their investor groups hold more than INR 25k crore of equity assets under management in the Indian markets shall do the same.
• The constituents of FPI investor group with more than INR 25k crore of equity assets in the Indian market may be exempted if they fulfill the specified criteria.

Timelines

• Disclosures are unnecessary for FPIs with over 50% of equity assets if investments are realigned within 10 trading days from the date when exceeding the threshold.
• For FPIs with over INR 25k crore of equity assets within 90 calendar days.
• Also for FPIs required to make disclosures on the date of applicability of the circular within 90 calendar days from the date of applicability of the circular.
• FPIs whose investments continue to exceed the threshold post expiry of timelines shall make the disclosures within 30 trading days from the expiry of such timelines.
• Non-disclosures shall render FPIs' registration invalid, ban such FPIs from further purchases, make FPIs liquidate its securities and exit the Indian securities market.

Effectiveness

• The circular will take effect from 1 November 2023