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SEBI Relaxes Timelines for Foreign Portfolio Investors’ Disclosures

The Securities and Exchange Board of India (SEBI) has recently amended the SEBI (Foreign Portfolio Investors) Regulations, 2019, through the SEBI (Foreign Portfolio Investors) (Amendment) Regulations, 2024. This update was accompanied by a new Master Circular for Foreign Portfolio Investors (FPIs), Designated Depository Participants (DDPs), and Eligible Foreign Investors (EFIs) issued on May 30, 2024.

The Amendment Regulations relax the timelines for FPIs to notify their respective DDPs and/or SEBI of any material changes.

Key Amendments:

  1. Categorization of Material Changes: SEBI has categorized material changes into two types:
    1. Type I Changes: These include critical changes that either render FPIs ineligible, or require them to seek fresh registration, render them ineligible for making fresh purchases, or impact privileges or exemptions. These could be changes of jurisdiction, name changes due to acquisition, merger, demerger, or ownership changes. FPIs must report these changes within seven working days and provide supporting documents within 30 days.
    2. Type II Changes: These include all other material changes. FPIs must report these changes and provide supporting documents within 30 days.
  2. Role of Designated Depository Participants (DDPs): DDPs must examine all material changes informed by FPIs and reassess their eligibility. In cases of Type I changes, FPIs are required to seek fresh registration. If there is a delay in notifying material changes, DDPs must inform SEBI within two working days, explaining the reason for the delay.
  • Impact of the Amendments:
  1. Operational Flexibility: The relaxed timelines provide FPIs with greater operational flexibility, particularly beneficial for hedge funds with administrators and service providers in different time zones.
  2. Compliance Alignment: The 30-day timeline for submission of documents aligns with Indian anti-money laundering rules, aiding FPIs in compliance efforts.
  3. Removal of Inconsistencies: The amendments to the Master Circular address inconsistencies between the FPI Regulations and the Master Circular regarding intimation timelines, thus promoting ease of doing business in India.

These changes are expected to streamline the process for FPIs, eliminate procedural hurdles, and enhance the overall ease of investing in India. The amendment is a welcome move by SEBI, addressing long-standing demands and aligning regulatory practices with international standards.