The Securities and Exchange Board of India (“SEBI”) has released a consultation paper proposing to modify the disclosure requirements for large foreign portfolio investors (“FPIs”).  In August 2023, by its circular SEBI/HO/AFD/AFD-PoD-2/CIR/P/2023/148, SEBI started monitoring FPIs with assets under management (“AUM”) exceeding INR250 billion (~ US$3 billion) (“Large FPIs”).  The circular imposed a requirement on Large FPIs to provide granular details of each of their investors on a look-through basis, for SEBI to determine if their place of effective domicile was in a country sharing a land border with India (“LBC”).  Although the circular gave some exemptions from disclosure to Large FPIs with a diversified investor base, there were still significant compliance challenges for Large FPIs.

SEBI has now proposed to modify the disclosure requirements for Large FPIs.  Instead of providing copious details of all its investors, a Large FPI can now self-certify regarding its investors and ownership.

• If a Large FPI self-certifies that more than 50% of the Large FPI’s AUM is held by investors from an LBC, such Large FPI will be regarded as one whose place of effective domicile is in an LBC.
  
• If a Large FPI self-certifies that more than 67% of its AUM is held by investors from non-LBCs, then such Large FPI will be regarded as one whose place of effective domicile is not in an LBC.
  
• Any Large FPI self-certifying that more than 50% but up to 67% of its AUM is held by investors from non-LPCs is required to make full disclosures of all its investors on a look-through basis for SEBI to determine whether such Large FPI can be regarded as being domiciled in an LBC.  In making such a determination, SEBI will assess the country/ nationality of the entities owning/ controlling/ holding an economic interest in a majority of the Large FPI’s AUM.

Self-certification will do away with the requirement for many Large FPIs of having to give multiple investor-related documents to SEBI, although SEBI retains the power to query a Large FPI who may have self-certified.