On March 20, 2024, the Securities and Exchange Board of India (SEBI) updated its circular regarding additional disclosure requirements for Foreign Portfolio Investors (FPIs) who hold more than 50% of their Indian equity Assets Under Management (AUM) in a single Indian corporate group. This update aims to protect investor interests and promote the securities market's development. The new rules took effect immediately.
Key Points:
· The amendment exempts FPIs with over 50% of their Indian equity AUM in a corporate group from additional disclosure requirements, provided they meet certain conditions:
- The apex company of the corporate group has no identified partner.
- The FPI does not hold more than 50% of its Indian equity AUM in that corporate group.
- The combined holding of these FPIs in the apex company must be less than 3% of the total equity share capital of the apex company.
· Custodians and Depositories will monitor the 3% limit daily for the apex company without an identified promoter. If the 3% limit is exceeded, Depositories will make this information public.
· FPIs must realign their investments below the 50% threshold within 10 trading days before making any new investments in the apex company that meet the 50% concentration criteria.
· The Custodians and the Designated Depository Participants Standards Setting Forum will establish the procedures to implement this circular.
Note: This circular revises the SEBI circular dated August 24, 2023.
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