SEBI Eases Regulations for Foreign Portfolio Investors- Check Details (image source: Getty Images)
The Securities and Exchange Board of India (SEBI) has introduced a new set of regulations to ease the compliance burden on Foreign Portfolio Investors (FPIs). SEBI has decided to exempt FPIs with over 50 per cent of their equity assets in a single corporate group in India from additional disclosure requirements, provided they meet certain conditions. This exemption is part of a broader initiative to streamline the process and encourage the ease of doing business for FPIs in the country, as per the PTI report.
Disclosure Timelines
SEBI’s recent board meeting concluded with a decision to simplify the disclosure timelines for FPIs. Material changes reported by FPIs will now be classified into two categories. Type I changes must be communicated to the designated depository participant within seven days, while Type II changes have a more lenient 30-day window. This reclassification aims to provide clarity and reduce the administrative load on FPIs.
Flexibility Post-Registration Expiry
In a move to offer greater flexibility, SEBI has approved measures that allow FPIs to manage their securities more effectively after the expiry of their registration. Notably, FPIs can now reactivate their registration within 30 days following expiry due to non-payment of fees. Additionally, FPIs are granted 180 days or until the end of the registration block to dispose of their securities.
Financial Disincentives For Delayed Disposal
SEBI has also outlined conditions for instances where FPIs fail to dispose of their securities within the specified 180-day period. An extended grace period of an additional 180 days is available, during which FPIs will incur a financial disincentive amounting to 5 per cent of the sale proceeds. Should the securities remain unsold after this period, they will be considered compulsorily written off by the FPI.
One-Time Opportunity for Existing Cases
SEBI has granted a one-time opportunity to resolve cases where securities are still held in accounts of FPIs with expired registrations. This includes a generous 360-day window, with the first 180 days free of financial penalties. This provision is designed to offer a fair resolution for FPIs facing such circumstances.
One-Time Opportunity for Existing Cases
Sebi has granted a one-time opportunity of 360 days for existing cases where securities are held by FPIs whose registration has expired. This includes a grace period of 180 days without any financial disincentive, followed by an additional 180 days with a 5 per cent financial disincentive.
Escrow Account Mechanism
Written-off securities will be transferred to an escrow account, operated by an exchange empanelled broker. The broker will attempt to sell the securities at the available market price, and the proceeds from the sale will be transferred to Sebi’s Investor Protection and Education Fund, PTI reported.
