The Securities and Exchange Board of India (‘SEBI’), by way of Circular dated August 24, 2023 (‘Original Circular’), mandated certain additional disclosures for foreign portfolio investors (‘FPIs’) that fulfilled the prescribed objective criteria along with exemptions from making such additional disclosures. By way of Circular dated March 20, 2024 (‘Circular’), SEBI has also exempted FPIs having more than 50 percent of its Indian equity assets under management (‘AUM’) in a corporate group from making additional disclosures, subject to compliance with the following conditions:

i.    the apex company of such corporate group has no identified promoter;

ii.   the FPI holds not more than 50 percent of its Indian equity AUM in the corporate group, after disregarding its holding in the apex company (with no identified promoter); and

iii.  the composite holdings of all such FPIs meeting the 50 percent concentration criteria (excluding FPIs which are either exempted or have previously disclosed in accordance with the Original Circular) in the apex company is less than three percent of the total equity share capital of the apex company.

Custodians and depositories are responsible for tracking utilization of the above three percent limit at the end of each day and notifying the public of a breach of such limit before start of trading on the next trading day. For any prospective investment in the apex company by FPIs that meets the 50 percent concentration criteria in the corporate group, the FPIs will be required to either: (i) realign their investments below the 50 percent threshold within 10 trading days, or (ii) make additional disclosures as prescribed by the Original Circular. The aforementioned requirements will not be applicable unless the three percent cumulative limit for the apex company continues to be met through such 10 trading days. Our previous write-up on ‘Enhanced Disclosure Requirements from FPIs’ can be accessed here.