On 20-3-2024, the Securities and Exchange Board of India (‘SEBI’) revised the circular which mandated additional disclosures by the Foreign Portfolio Investors (‘FPIs’) holding more than 50% of their Indian equity Assets Under Management (‘AUM’) in a single Indian corporate group to protect the interest of investors in securities and to promote the development of securities market. The provisions came into effect on 20-3-2024.
Key Points:
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The amendment has exempted the FPIs having more than 50% of its Indian equity Assets Under Management (‘AUM’) in a corporate group from making additional disclosures.
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Although, Such FPIs will have to comply with the following conditions:
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Apex company of corporate group has no identified partner.
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FPI does not hold more than 50% of its Indian equity AUM in that corporate group.
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Composite holding of these FPIs in apex company should be less than 3% of the total equity share capital of the apex company.
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The track of utilization of 3% limit for apex company will be done by the Custodians and Depositories at the end of each day without an identified promoter.
In case, the limit of 3% is breached, Depositories will make this information public.
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The FPI will be required to realign their investments below 50% threshold within 10 trading days for making any prospective investment in the apex company that meet the 50% concentration criteria.
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The Custodians and the Designated Depository Participants Standards Setting Forum will frame the process flow to implement this circular.
Note: This circular revises SEBI circular dated 24-8-2013.
