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SEBI’s FPI mandate will be tricky to enforce, say experts

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Yesterday, SEBI issued a consultation paper, proposing higher norms for certain high risk FPIs. The regulator has mandated additional granular disclosure requirements from such high-risk and large FPIs, who have more than 50% holding in one entity. However, experts believe that enforcement of the mandate will be tricky.

In this regard, Mr. Siddhant Mishra from the Financial Express (India) has written an article discussing the consultation paper, the objectives it wants to achieve and the challenges for the same.

The article also features views of Mr. Sumit Agrawal, Managing Partner, Regstreet Law Advisors and former SEBI officer, who observed that, “By ensuring transparency and curbing round-tripping, this initiative will not only safeguard investor interests but also strengthen tax administration. Many foreign funds and FPIs have struggled to establish ‘commercial substance’ or demonstrate ‘beneficial ownership’, leading to diversion of dividends to pass-through entities instead of their rightful owners. Effectiveness of the proposal ultimately depends on dedicated action rather than mere provisions, as a decade of enforcement against FPIs has revealed.”

Readers are also welcome to send their views to Regstreet Law Advisors at info@regsteetlaw.com.

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