(Bloomberg) — India’s securities market regulator Monday approved raising the threshold for granular disclosures on ultimate beneficial ownership of global funds less than two years after the rule was implemented, citing growth in volume of shares traded in the country’s stock market.
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Global funds with assets under management of less than 500 billion rupees ($5.8 billion) in the local stock market will be exempted from making additional disclosures, up from 250 billion rupees earlier, the Securities and Exchange Board of India said in a statement following a meeting of its board.
The relaxation comes amid one of the biggest exodus of foreign capital from local stocks, with foreign investors pulling out $28 billion since the end of September that spurring a $1.2 trillion rout in stocks. The regulator’s new Chairman Tuhin Kanta Pandey earlier this month highlighted the need to build a conducive environment to attract foreign flows.
The additional disclosure rules for some foreign funds were brought into prevent subvention of the country’s minimum public shareholding rules and also to deter round-tripping of funds by domestic investors into the stock market. It came in the backdrop of US-based short seller Hindenburg Research’s allegations that several foreign portfolio investors that held stake in Adani Group companies were linked to its founders. The power-to-ports conglomerate has repeatedly denied the allegations.
Among other decisions taken at the board meeting, the regulator will form a high-level panel to review conflict of interest norms for its board members.
One of the terms of reference will include a mechanism for disclosure of recusals taken by a board member, Pandey said at the media briefing.
Pandey earlier this month said SEBI will take steps to boost disclosure of such conflicts to improve transparency.
The step comes months after Hindenburg Research alleged that the former Chairperson Madhabi Puri Buch had a conflict of interest that prevented a thorough investigation into Adani Group’s foreign shareholding structure. Buch denied the allegation and said she had made relevant disclosures to SEBI.
Pandey also said the regulator will look into issues around the National Stock Exchange’s initial public offering, which is still awaiting final approval.
