What Are Sebi's New Strict Disclosure Norms For FPIs, According to the Investor Update? Check Specifics

Foreign Portfolio Investors (FPIs) must declare any major change in their structure and common ownership within seven working days, according to strict regulations set out by capital markets regulator Sebi.

The Securities and Exchange Board of India (Sebi) has the authority to request any further paperwork from newly registered FPIs, per a notice.

According to the new regulations, FPIs must provide written notice to Sebi and the authorized depository within seven working days of receiving any incorrect or misleading information concerning a major change in either their structure or control.

Moreover, FPIs will be required to notify any penalties, ongoing legal processes, or results of investigations for which an overseas regulator may have already taken action against them or is now in the process of doing so within seven days.

According to Sebi, foreign portfolio investors or investment groups must notify their authorized depository participant as soon as practicable but no later than seven working days after any direct or indirect changes to their organizational structure, shared ownership, or control.

The information will then be sent to the markets regulator by depository participants within two days.

The phrase "forthwith" has been changed to "as soon as practicable but not later than seven working days" in the current rules, which formerly obliged FPIs to notify the authorized depository participant.

Market analysts think that since there was no clear deadline outlined in the laws, FPIs and custodians used to take a long time to provide this information.

According to Sebi, the new restrictions are in place as of March 14.

A committee led by K V Subramanian, a former senior economic advisor to the Indian government, was established by Sebi in August 2022 to advise it on ways to make it easier for FPIs to do business in India.

The advisory group was also tasked with recommending the necessary actions to promote FPI participation in the bond market and providing advice on matters pertaining to the investments and activities of such investors in Indian financial markets.