SEBI Extends Reporting Deadlines For Foreign Portfolio Investors, Offers Greater Flexibility

The primary modification introduced by SEBI involves the categorization of material changes notified by FPIs into two distinct groups: Type I and Type II. Type I introduces which may impact an investor's eligibility or privileges within the Indian market. Examples of Type I changes include shifts in the investor's registration jurisdiction, alterations due to mergers or acquisitions, or changes in ownership structure. FPIs are required to report Type I changes within seven working days and submit supporting documents within 30 days.

Type II changes encompass modifications which are considered as less critical, such as minor adjustments in investor groups. FPIs now have 30 days to report Type II changes and submit any necessary documents.

Moreover, SEBI has stated protocols for Designated Depository Participants (DDPs) in handling these material changes. DDPs are mandated to scrutinize all reported changes and reassess the eligibility of FPIs, with specific emphasis on Type I changes. In cases where FPIs fail to promptly inform DDPs of material changes, DDPs are obligated to notify SEBI within two working days.

These revisions follow recent amendments to the SEBI (Foreign Portfolio Investors) Regulations, 2019 which primarily enhances operational flexibility for FPIs post the expiry of their registration.

SEBI circular also includes provisions for addressing instances where FPIs continue to hold securities beyond stipulated timeframes. The guidelines outline mechanisms for disposing of such securities while maintaining Know Your Customer (KYC) and Anti Money Laundering/Countering the Financing of Terrorism (AML/CFT) requirements.

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