With effect from March 15, 2023, the Securities and Exchange Board of India (“SEBI”) amended the SEBI (Foreign Portfolio Investors) Regulations, 2019 (“FPI Regulations”) to bring transparency in the ownership structure of a foreign portfolio investor (“FPI”). The amendments provide SEBI with broader powers to require additional information while examining the FPI registration applications and impose stricter reporting timelines for disclosing material changes, including details of the investor group. A summary of the revised reporting timelines and the amendments are set out below:
a) if any information or particulars previously submitted to SEBI or the DDP are found to be false or misleading, in any material respect;
b) if there is any material change in the information including any direct or indirect change in its structure or ownership or control or investor group, previously furnished by it to SEBI or the DDP;
c) in case of any penalty, pending litigation or proceedings, findings of inspections or investigations for which action may have been taken or is in the process of being taken by an overseas regulator against it; and
d) in case of any direct or indirect change in structure or common ownership or control of FPI or its investor group.
In addition to (b) above, under the Master Circular for FPIs, DDPs, and Eligible Foreign Investors dated December 19, 2022 (“Master Circular”), ‘material change’ also includes change in regulatory status, merger, demerger or restructuring, change in category/ sub-category / structure/ jurisdiction/ name of FPI/ beneficial ownership etc. However, no specific timeline was prescribed under the Master Circular for reporting such changes. Accordingly, the timeline prescribed under the FPI Regulations should also be complied with for the disclosures under the Master Circular.
Separately, keeping in mind the recent changes to the beneficial ownership threshold under the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005, the DDPs may now require additional information, to ensure compliance with the amended threshold and FPI Regulations.
Please find attached a copy of the amendment to the FPI Regulations.
This update has been contributed by Abhinav Bhalaik (Partner) and Heena Ladji (Associate).
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