New Delhi: India’s market regulator, the Securities and Exchange Board of India (SEBI), has announced plans to enhance disclosure requirements for high-risk offshore funds to prevent violations of public float norms. This move comes in light of an ongoing investigation into potential violations by offshore funds linked to the companies under the umbrella of Gautam Adani’s group. However, the investigation has yet to yield any evidence of wrongdoing, and the Adani Group has firmly denied any misconduct.
In a consultation paper released by SEBI, market participants have been invited to provide their input on the proposed changes. The regulator has set a deadline of June 20 for receiving comments from the market. According to SEBI, all high-risk funds, excluding those owned by the government, sovereign wealth funds, pension funds, and public retail funds, will be subject to the new disclosure requirements. These funds will be required to disclose all holders who possess economic and controlling rights.
Under the proposal, any high-risk offshore fund that holds over 50% of its equity Asset Under Management (AUM) in a single corporate group will be obligated to make additional disclosures. These funds will also need to identify the ultimate owners of the investments. Moreover, if there are any changes in the holdings, the funds must report these changes to the custodian banks within seven days. These custodian banks are the entities through which the funds flow into India.
The scope of the disclosure requirements will extend to funds with more than 250 billion rupees ($3 billion) invested in the Indian equity markets. By imposing these additional disclosure obligations, SEBI aims to enhance transparency and prevent potential violations of public float norms by high-risk offshore funds.
The regulator’s proactive approach to strengthening disclosure requirements demonstrates its commitment to maintaining the integrity of India’s financial markets. By seeking feedback from market participants, SEBI aims to strike a balance between facilitating foreign investments and safeguarding against any potential risks associated with high-risk offshore funds. These proposed measures are part of SEBI’s ongoing efforts to ensure a fair and transparent investment environment for all stakeholders involved in the Indian capital market.