Sebi proposes mandating additional disclosure for high-risk FPIs

Capital markets regulator SEBI on Wednesday came out with a proposal mandating enhanced disclosures from high-risk Foreign Portfolio Investors (FPIs) to guard against possible circumvention of the Minimum Public Shareholding (MPS) requirement.

Capital markets regulator SEBI on Wednesday came out with a proposal mandating enhanced disclosures from high-risk Foreign Portfolio Investors (FPIs) to guard against possible circumvention of the Minimum Public Shareholding (MPS) requirement.

This comes after SEBI observed that some FPIs have concentrated a substantial portion of their equity portfolio in a single investee company. In some cases, these concentrated holdings have also been near static and maintained for a long time.

"Such concentrated investments raise the concern and possibility that promoters of such corporate groups, or other investors acting in concert, could be using the FPI route for circumventing regulatory requirements such as that of maintaining Minimum Public Shareholding," Sebi said.

In its consultation paper, the regulator has proposed obtaining granular information from high-risk FPIs that have concentrated equity holdings in single companies or business groups.

Under the proposal, such FPIs need to make additional disclosures about the ownership, economic interest, and control of such funds.

Also, the regulator has suggested categorising FPIs based on risk.

While government and related entities like central banks, and sovereign wealth funds have been placed under the low-risk category, pension funds and public retail funds are categorised as moderate risk. Further, all other FPIs have been put in the high-risk category.