Over 150 offshore investors have lost their foreign portfolio investor (FPI) license for not complying with the Securities and Exchange Board of India’s new documentation requirements, said three people privy to the development. These funds have refused to provide the beneficial ownership (BO) information to their custodians as mandated by the capital markets regulator.
According to Sebi data, the total number of FPIs has come down from 9,437 in February to 9,385 now. This is the first ..
Funds which have lost their licences are relatively smaller ones, said the people aware of the matter. The total exposure of these 150 funds put together would be around $1-1.5 billion, they said.
“Most of the funds which have refused to provide the information are Mauritius and Cayman based trusts and family offices,” said a global custodian. “However, on a net basis, the fall in the number of FPIs is only 45-50 since several new FPIs have also registered with Sebi during the period,”
The markets regulator had issued a circular on April 10 last year asking foreign portfolio investors (FPIs) to identify the Beneficial Ownership in their funds. In cases where there is no significant BO based on economic ownership, fund managers and other senior management officials of the funds were to be considered BOs. The last date for submission of this information was March 20. Some of them had sought additional time from the market regulator.
“FPIs not in compliance with the new ..
Experts said some of the smaller FPIs have governance and transparency related issues and disclosing their actual beneficiary ownership to regulators could land them in trouble. Reluctance of some of these funds to disclose the BO information stems from such concerns.
“You cannot rule out the fact that some of the FPIs are being used as vehicles for money laundering and tax evasion,” said Tejesh Chitlangi, partner, IC Universal Legal. “Some of them even have Indians as underlying invest ..
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