Sebi seeks ‘beneficial owners’ info for FPIs from China, others

Mumbai: New Delhi is not taking its eyes off Chinese money flowing into Indian listed stocks. On Sunday, the capital markets regulator asked market custodians to fish out the latest information on large investors from China and neighbouring countries trading on local exchanges through foreign portfolio investors (FPIs).MNC banks and domestic custodians were told to share details of ‘beneficial owners’ — ultimate investors having sizeable stake or control — from China, Taiwan, Hong Kong, Pakistan, Bangladesh, Myanmar, Nepal, Afghanistan, and Bhutan.The Securities & Exchange Board of India (Sebi) sought similar information in mid April, immediately after India imposed restrictions under press note-3 (PN3) on foreign direct investments (FDI) from China and other countries sharing border with India. But as no restrictions on FPIs followed, it was felt that given the churn of investors within a fund and more volatile nature of FPI holdings compared with FDI, such a move would not be pursued by the government. Now, with Sebi again asking custodians to collate latest data over a weekend and submit it next morning, there’s speculation that the government is keeping its options open.“If restrictions similar to PN3 are introduced, this could then impact not just funds setup in jurisdictions like HK but also US and European funds where the BO is from jurisdictions such as China, HK, Pakistan, Nepal and other border countries,” said Rajesh H Gandhi, partner, Deloitte India.‘BO’ in an FPI can be defined either by ownership, where an investor has put in 25% or more of fund corpus; or control, where an investor, even with lower investment, ‘controls’ the board of the fund’s asset management company or has influence over senior management. Investors with 25% or higher BOs in FPIs from regular jurisdictions have to give greater disclosures; the threshold is 10% for FPIs from high-risk jurisdictions like Mauritius, and 15% for entities like trusts.

from Economic Times https://ift.tt/2HhUI2M