To prevent violations of the Minimum Public Shareholding regulations and to guard against potential abuse of the FPI route for opportunistic takeover of Indian companies, the  Capital market regulator Securities and Exchange Board of India (Sebi) has mandated additional disclosures for Foreign Portfolio Investors (FPIs).

Foreign Portfolio Investors (FPIs) who have either concentrated single group exposures or considerable overall holdings in their India equities investment portfolio will be susceptible to it, according to Sebi's consultation document.

For the time being, the market regulator has suggested that high-risk FPIs who manage more than 50% of their equity assets in a single corporate group be subject to the same disclosure requirements as all natural persons, public retail funds, or sizable publicly traded entities.

Such concentrated investments enhance the risk that corporate group promoters or other investors working together could use the FPI route to get around regulatory requirements such maintaining Minimum Public Shareholding (MPS). According to the consultation document, "If this were the case, the apparent free float in a listed business may not be its genuine free float, increasing the danger of market manipulation in such scrips.

Existing high-risk FPIs that hold more than Rs 25,000 crore in Indian equity markets are being asked to comply with additional granular disclosure requirements within 6 months, or else reduce their AUM to Rs 25,000 crore within that time frame, as per proposal from SEBI.

"The additional disclosure would include granular data of all entities with any ownership, economic interest, or control rights on a full look-through basis, up to the level of all natural persons and/or Public Retail Funds or large public listed entities," according to the further disclosure. Additionally, the FPIs must notify their authorised depositary participants of any major changes to the same within 7 working days of the modification, said Sebi in its paper.

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