Capital markets regulator SEBI has issued strict standards for foreign portfolio investors (FPIs), requiring them to disclose any material changes to their structure and collective ownership within seven business days.
In relation to new FPI registrations, the Securities and Exchange Board of India (SEBI) may ask them for additional documents that a notice may require.
Under the new rules, FPIs will notify SEBI and the designated depositary in writing within seven working days of any false or misleading information about any material change and any change in their structure or control.
In addition, FPIs must be notified within seven days of any penalties, pending proceedings, findings of investigations that may have action taken or may be subject to action by a foreign regulator.
“In the event of any direct or indirect change in structure or common ownership or control of the foreign portfolio investor or group of investors, it must notify its nominated depositary participant as soon as practicable, but no later than seven business days,” SEBI said.
The custodian participants, in turn, transmit the information to the market regulator within two days.
Under the existing rules, FPIs were required to notify the designated depositary participant “promptly”, which has now been replaced by “as soon as possible but no later than seven working days”.
Market experts believe that FPIs and custodians used to take a long time to disclose this information because the rules did not impose a strict timetable.
The new rules went into effect on March 14, SEBI said.
In August 2022, SEBI had set up a committee headed by KV Subramanian, the former Chief Economic Adviser to the Government of India, to advise on measures to facilitate FPIs’ operations in India.
In addition, the Advisory Committee has been tasked with proposing measures needed to encourage FPI participation in the bond market and advising on issues related to such investors’ investments and operations in the Indian financial markets.
