With the deadline to disclose the beneficial owners in FPI to markets watchdog Sebi expiring on Monday, a couple of foreign investors have sought legal avenues to avoid complying with the regulations.
Two Mauritius-based foreign portfolio investors — LTS Investment Fund and Lotus Global Investment — have reportedly approached the Securities Appellate Tribunal (SAT) to seek urgent relief from adhering to Sebi’s new norms for foreign investors.
These two FPIs were named in the January 2023 report on Adani Group by the US-based short-seller Hindenburg Research.
They have asked the SAT to direct the Securities and Exchange Board of India (Sebi) to give them more time.
Sebi set a deadline of September 9 for non-compliant FPIs that fail to provide detailed ownership disclosures to sell off their excess holdings.
On Friday, there were rumours that some overseas funds were rushing to sell their holdings ahead of Monday’s deadline.
“Even though Sebi’s deadline for disclosure of beneficial owners in FPI holdings ends on Monday, September 9, it is learnt that two FPIs have moved the appellate tribunal SAT seeking time till March 2025 to meet these norms. Therefore, the verdict from the SAT is awaited,” V.K. Vijayakumar, chief investment strategist, Geojit Financial Services, said.
“If the verdict comes in their favour, that will not impact the market. Otherwise there may be some selling pressure from these FPIs which might impact the market marginally,” he said.
In August 2023, Sebi came out with a circular, whereby it directed FPIs with over 50 per cent of their equity assets under management (AUM) in a single corporate group, or with total holdings in Indian equity markets exceeding ₹25,000 crore, to disclose detailed information on all entities that have any ownership, economic interest or control in the FPI.
These regulations were introduced to prevent potential round-tripping by certain promoters. The move had its genesis in the Adani issue where it could not identify the beneficial owners of some foreign portfolio investments in Adani stocks since the existing regulations were lax in identifying the true owners.
PTI
