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๐’๐„๐๐ˆ ๐ฉ๐ซ๐จ๐ฉ๐จ๐ฌ๐ž๐ฌ ๐œ๐ก๐š๐ง๐ ๐ž๐ฌ ๐ญ๐จ ๐๐ข๐ฌ๐œ๐ฅ๐จ๐ฌ๐ฎ๐ซ๐ž ๐ซ๐ž๐ช๐ฎ๐ข๐ซ๐ž๐ฆ๐ž๐ง๐ญ๐ฌ ๐Ÿ๐จ๐ซ ๐…๐๐ˆ๐ฌ

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SEBI has recenty issued a consultation paper to improve ease of doing business with respect to the disclosure requirements for Foreign Portfolio Investors (โ€œFPIโ€).

๐๐š๐œ๐ค๐ ๐ซ๐จ๐ฎ๐ง๐

In August 2023, the SAST Regulations, FPI Regulations and Press Note 3 were amended to bring in the safeguards against potential circumvention of Minimum Public Shareholding (โ€œMPSโ€) norms.

SEBI Circular was issued on August 24, 2023, requiring additional disclosure of information regarding holding ownership, economic interest, or control in an FPI, on a look-through basis, without any threshold, by FPIs meeting any of the following criteria: (i) FPIs holding over 50% of their Indian equity AUM within a single Indian corporate group, or (ii) individually, or collectively with their investor group, holding more than INR 25,000 crore of equity AUM in the Indian markets.

The present Consultation Paper has proposed the following:

1. ๐„๐ฑ๐ž๐ฆ๐ฉ๐ญ๐ข๐จ๐ง ๐ญ๐จ ๐ฎ๐ง๐ข๐ฏ๐ž๐ซ๐ฌ๐ข๐ญ๐ฒ ๐Ÿ๐ฎ๐ง๐๐ฌ ๐š๐ง๐ ๐ฎ๐ง๐ข๐ฏ๐ž๐ซ๐ฌ๐ข๐ญ๐ข๐ž๐ฌ ๐ซ๐ž๐ฅ๐š๐ญ๐ž๐ ๐ž๐ง๐๐จ๐ฐ๐ฆ๐ž๐ง๐ญ๐ฌ.

Under the FPI Regulations, 2019, university-related endowments belonging to universities that have operated for more than five years and are situated in FATF member countries are qualified for registration as Category-I FPI.

It is proposed to exempt university funds and university-related endowments, registered or eligible for registration as Category-I FPI, from the disclosure requirements outlined in the SEBI Circular dated August 24, 2023, subject to certain additional conditions: (i) the university must be listed in the Top 200 ranking according to the latest available QS World University Rankings (ii) its India equity AUM must be less than 25% of its Global AUM, (iii) its global AUM must exceed INR 10,000 crore, and (iv) it must have filed the appropriate return/filing with the respective tax authorities in its home jurisdiction.

2. ๐„๐ฑ๐ž๐ฆ๐ฉ๐ญ๐ข๐จ๐ง ๐ข๐ง ๐œ๐š๐ฌ๐ž ๐จ๐Ÿ ๐œ๐จ๐ฆ๐ฉ๐š๐ง๐ข๐ž๐ฌ ๐ฐ๐ข๐ญ๐ก ๐ง๐จ ๐ข๐๐ž๐ง๐ญ๐ข๐Ÿ๐ข๐ž๐ ๐ฉ๐ซ๐จ๐ฆ๐จ๐ญ๐ž๐ซ ๐š๐ง๐ ๐ฅ๐จ๐ฐ ๐…๐๐ˆ ๐ก๐จ๐ฅ๐๐ข๐ง๐ ๐ฌ

If any FPI holds a concentrated position in a listed company without any identified promoter, the entire shareholding is classified as โ€œpublicโ€ and there is no risk of circumvention of MPS requirement, hence the consultation paper proposes to relax the additional disclosure requirements for such FPIs. 

Further, if any FPI holds more than 50% of its Indian equity AUM in the corporate group, with no identified promoter and the composite holdings of all such FPIs in the apex company in the group is less than 3% of the total equity share capital of the company, it would be exempted from the additional disclosure requirements. 

A copy of the SEBI Consultation Paper is enclosed herewith.

Readers are welcome to share their views with Regstreet Law Advisors on info@regstreetlaw.com

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