The Securities and Exchange Board of India (SEBI) is planning to relax the enhanced disclosure norms for certain foreign portfolio investors (FPIs) in a bid to promote ease of doing business.
The regulator has suggested exempting category-I university funds and university-related endowments that meet specific criteria from enhanced disclosure requirements. The criteria include a top 200 ranking according to the latest available QS World University Rankings issued by QS Quacquarelli Symonds, a global AUM of more than ₹10,000 crore and an India equity AUM of less than 25 per cent of its global AUM.
“Such funds generally enjoy tax-exempt status in their home jurisdictions and are therefore subject to disclosure requirements to ensure that the corpus of the fund is used for the purposes for which the fund was set up. Accordingly, university funds and university-related endowments that meet certain size, vintage, stature, tax status, disclosure of holdings and broad-based holdings criteria may be exempted from the additional disclosure requirements,” the regulator said in a consultation paper.
Promoting business
Sebi is also working to to exempt companies with no identified promoter and low FPI holdings from the norms.
“In case of listed companies without any identified promoter, the entire shareholding is classified as “public” and there is no risk of circumvention of MPS requirements. To that extent, there is room for relaxing the additional disclosure requirements for FPIs holding concentrated positions in such companies. However, the concerns regarding circumvention of SAST Regulations would still persist,” SEBI said.
If an FPI holds more than 50 per cent of its India equity AUM in the corporate group, even after disregarding its holding in the apex company (with no identified promoter), it would come under the disclosure requirements. If not, as long as the composite holdings of all such FPIs in the apex company in the group is less than 3 per cent of the total equity share capital of the company, it would be exempted from the additional disclosure requirements.
Sebi has sought comments till March 8 from the public on the proposals.
In August last year, SEBI had asked FPIs to disclose detailed information about entities holding any ownership, economic interest, or control in them, without any threshold. This was for FPIs holding over 50 per cent of their equity assets in a single Indian corporate group or holding more than ₹25,000 crore of equity AUM in the Indian markets.