Sebi tightens disclosure rules for FPIs with 50% in 1 business group
Mumbai, June 29, 2023
Markets regulator Sebi on Wednesday said that if more than 50% of the assets of a foreign fund is invested in the shares of a single business group, it should disclose the identity of its actual owners and also who controls the fund. This was done to plug a possible loophole in the rules for foreign funds that some companies may have used to circumvent the minimum public shareholding (MPS) in companies.
Sebi in its board meeting during the day also halved the timeline for a company to get listed after the IPO process. From December this year, a new company will be able to list in three working days after the close of an offer, down from six days currently.
In January this year, US-based short-seller Hindenburg Research had alleged that the Adani Group was using a clutch of Mauritius-based firms to circumvent Sebi's MPS norms. This rule requires that every publicly listed company (except the ones which were listed less than three years ago) should have at least 25% of its shares with non-promoter shareholders. Sebi is still investigating those allegations but had faced some challenges in obtaining the names of the final beneficiaries of the foreign funds that had invested over 90% of the corpus in Adani Group companies.
The rules were being changed "to guard against possible circumvention of regulations such as (MPS) or disclosures under (Takeovers Regulations)". Foreign funds will have to now make "additional granular level disclosures regarding ownership, economic interest, and control". that hold "more than 50% of their Indian equity AUM in a single Indian corporate group". Even foreign investor groups that together have invested more than Rs 25,000 crore in India will have to make such granular disclosures, a Sebi release said.
Sebi also halved the time for a company to list to three days, after the close of the bidding in an IPO. In market parlance, this is T+3 process for IPO with T being the date of close of the bidding process. According to market players, after India achieved T+1 (T = day of trade) settlement cycle in the cash and derivatives segment of stock trading from January 27, 2023, which was effected without any problem, shortening of the IPO schedule was expected.
[The Times of India]
