ARTICLE
19 April 2024

Legalaxy – Monthly Newsletter Series – Vol XI – April, 2024

VA
Vaish Associates Advocates

Contributor

Established in 1971, Vaish Associates, Advocates is one of the best-known full-service law firms in India. Since its inception, it continues to serve a diverse clientele, including domestic and overseas corporations, multinational companies and individuals. Presently, the Firm has its operations in Delhi, Mumbai and Bengaluru.
Securities Exchange Board of India ("SEBI"), vide its circular dated August 24, 2023 ("FPI Circular"), had mandated additional disclosures for foreign portfolio investors ("FPIs") fulfilling certain objective criteria.
India Corporate/Commercial Law
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SEBI Relaxes Additional Disclosures By FPIs Fulfilling Certain Objective Criteria

Securities Exchange Board of India ("SEBI"), vide its circular dated August 24, 2023 ("FPI Circular"), had mandated additional disclosures for foreign portfolio investors ("FPIs") fulfilling certain objective criteria. FPIs fulfilling any of the following criteria were required to provide granular details of all entities holding any ownership, economic interest, or exercising control in the said FPIs: (a) FPIs holding more than 50% of their Indian equity assets under management ("AUM") in a single Indian corporate group; and (b) FPIs that individually, or along with their investor group hold more than INR 25,000 crores of equity AUM in the Indian markets.

Further, FPIs satisfying any of the criteria listed under Para 8 of the FPI Circular were exempted from the additional disclosure requirements, subject to conditions specified in the said FPI Circular.

SEBI, vide its circular dated March 20, 2024 ("Amended FPI Circular"), has now relaxed the additional disclosure requirements for FPIs holding more than 50% of its Indian equity AUM in a corporate group, subject to fulfilment of all the following 3 conditions:

  1. The apex company of such corporate group shall have no identified promoter;
  2. The FPI's holding should not be more than 50% of its Indian equity AUM in the corporate group, after disregarding its holding in the apex company (with no identified promoter); and
  3. The composite holdings of all such FPIs (that meet the 50% concentration criteria excluding FPIs which are either exempted or have made disclosure) in the apex company should be less than 3% of the total equity share capital of the apex company.

The Amended FPI Circular states that custodians and depositories shall track the utilisation of this 3% limit for apex companies, without an identified promoter, at the end of each day. Upon the 3% limit being met or breached, depositories are required to make this information public, before the start of trading on the next day.

Further, for any prospective investment in the apex company by FPIs that meet the 50% concentration criteria in the corporate group, FPIs would be required to either realign their investments below the 50% threshold within a period of 10 trading days or make such additional disclosures prescribed in the FPI Circular. However, no such requirement, to realign or make disclosures, shall be applicable unless the 3% cumulative limit for the apex company continues to be met through the said 10 trading days.

The Amended FPI Circular shall come into force from immediate effect.

To read the Amended FPI Circular click here & to read the FPI Circular click here.

Click here to read the full report.

© 2024, Vaish Associates Advocates,
All rights reserved
Advocates, 1st & 11th Floors, Mohan Dev Building 13, Tolstoy Marg New Delhi-110001 (India).

The content of this article is intended to provide a general guide to the subject matter. Specialist professional advice should be sought about your specific circumstances. The views expressed in this article are solely of the authors of this article.

ARTICLE
19 April 2024

Legalaxy – Monthly Newsletter Series – Vol XI – April, 2024

India Corporate/Commercial Law

Contributor

Established in 1971, Vaish Associates, Advocates is one of the best-known full-service law firms in India. Since its inception, it continues to serve a diverse clientele, including domestic and overseas corporations, multinational companies and individuals. Presently, the Firm has its operations in Delhi, Mumbai and Bengaluru.
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