FPI Regulatory Deadline: Disclosure or Sale

The circular states that any foreign portfolio investor (FPI) holding more than 50% of a single stock or group of stocks or having assets under management of more than ₹25,000 crore, will have to furnish details of the ultimate beneficial owner down to the last natural person.

Friday is the deadline to liquidate assets if these standards are not met.

If FPIs fail to comply with this rule and sell their holdings from Monday, a 5% penalty will be levied on the sale proceeds. SEBI’s August 2023 circular came into effect from November 1, 2023. FPIs have been given 90 days to disclose beneficial ownership details or reduce their holdings.

This 90-day period ended in January 2024, after an additional 30-day grace period was granted to disclose beneficial owner details.

REITs found in breach of the August 2023 circular and failing to disclose beneficial ownership details were required to liquidate their positions within 180 days.

Several FPIs were confident that they could apply for an exemption under the exemption criteria offered by the regulator.

Collective investment vehicles, regulated in the home jurisdiction, were initially exempted from the scope of the August circular. These criteria were amended in May 2024, following which several FPIs sought exemption from this circular through written applications to SEBI.

Both the Sensex and the Nifty saw declines of 1% in Friday’s trading session, ending the week on a negative note ahead of the release of the all-important US jobs data.