SEBI lays down stringent norms for FPIs, asks them to disclose structure, change in ownership within 7 working days

Capital markets regulator SEBI has laid down stringent rules for foreign portfolio investors (FPIs), asking them to disclose any material change in their composition and common ownership within seven working days.

According to a notification, with respect to new FPI registration, the Securities and Exchange Board of India (SEBI) may ask them for any additional documents that may be required.

Under the new regulations, FPIs shall inform SEBI and the designated depository within seven working days in writing of any false or misleading information regarding material changes and any change in their composition or control.

Further, FPIs will have to inform within seven days about any penalties, pending proceedings, findings of investigations, for which action may be taken or is being taken by any foreign regulator.

“In case of any direct or indirect change in the composition or common ownership or control of the foreign portfolio investor or investor group, it shall, as soon as possible, but not later than seven working days, bring it to the notice of its designated depository participant,” SEBI said.

In turn, the depository participant shall submit the information to the market regulator within two working days.

As per the existing rules, FPIs were required to inform the designated depository participant “immediately”, which has now been replaced with “as soon as possible but not later than seven working days”.

Market experts believe that FPIs and custodians used to take a long time in disclosing these information as there was no strict timeline prescribed in the regulations.

SEBI said the new rules have come into effect from March 14.

In August 2022, SEBI constituted a committee headed by KV Subramaniam, former Chief Economic Advisor to the Government of India, to advise it on measures for ease of doing business by FPIs in India.

In addition, the Advisory Committee was tasked with suggesting measures necessary to encourage participation of FPIs in the bond market and to advise them on issues relating to investment and operations of such investors in the Indian financial markets.

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