Additional Disclosure Requirements

A potential misuse of pooled investment vehicles by promoters of listed entities to hold concentrated equity positions in their companies through their group entities is something that remains a cause for concern for regulators world-wide. Such structures raise questions around scope for circumvention of the minimum public float norms and substantial acquisition of shares and takeover norms by listed entities. Similarly, there are guidelines in India for strategic investments from land-border countries, largely known in market parlance as the Press Note-3 norms. Circumvention of the said norms through the FPI route could significantly influence the Indian markets.

With a view to guard against such possible circumventions, SEBI’s circular dated August 24, 2023 requires disclosure of granular details of all entities holding any ownership, economic interest, or control in an FPI, on a full look through basis, without any threshold, by FPIs, that fulfil any of the following criteria:

• holding more than 50% of their Indian equity Assets Under Management (AUM) in a single Indian corporate group; or
• individually, or along with their investor group (in terms of Regulation 22(3) of the FPI Regulations, 2019), holding more than INR 50,000 crore of equity AUM in the Indian markets.

Exemption from making the additional disclosures as prescribed under:

Certain FPIs, such as those that are regulated funds with a broad based, pooled structure with widespread investor base or those having ownership interest by Government or Government related investors, which do not pose aforesaid regulatory risk, have been exempted from such enhanced disclosure requirements, subject to certain conditions. Also, FPIs with concentrated holdings in listed entities with no identified promoter group, where there is no risk of breach of Minimum Public Shareholding (MPS) have been exempted from the additional disclosure requirement, subject to certain conditions.

Standard Operating Procedures:

The Standard Operating Procedures for seeking exemption from additional disclosures as mentioned above is published on the website of the DDPs. The same can also be accessed here: