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Below Quote FPI quote By Manoj Purohit, Partner & Leader – Financial Services Tax, BDO India

“The recent anticipated proposal by SEBI to make disclosure norms more stringent for FPIs has reignited the discussion on India’s stand on promulgating ease of doing business for foreign investors. Risk-based classification is proposed in the consultation paper released by SEBI last week. FPIs holding more than 50% of their equity AUM in a single corporation or with an overall holding in Indian equity markets of over Rs. 25,000 Cr will be classified as 'high risk.' Such FPIs will be required to furnish additional information regarding their ownership, economic interests, and control rights resulting in additional disclosures and compliance burden for foreign funds.

While lifting the corporate veil to look at the ultimate natural person in the FPI structure, the prevailing challenge of secrecy or privacy laws in certain offshore jurisdictions where the FPI is domiciled could pose a roadblock on disclosure requirements and for compliances.

With the present set of developments the regulator desires to ensure utmost disclosures by the funds which would put to rest the ongoing debate of who can and up to what extent one can have economic control and beneficial ownership in the FPIs.

It is expected that FPIs will take the additional disclosure requirement and regulatory announcements made by the SEBI in the right direction which would further accelerate the momentum of India’s growth story.”

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