SEBI Considers Easing Extra Ownership Disclosure Rules for Foreign Portfolio Investors
The Securities and Exchange Board of India (SEBI) is reviewing its additional disclosure rules for Foreign Portfolio Investors (FPIs). These rules ask certain FPIs to reveal, layer by layer, every person who owns or controls them.
Under the current rules (in force since November 2023), an FPI must make these extra disclosures if it holds more than 50% of its Indian equity investments in one corporate group, or if it (with its investor group) holds more than ₹50,000 crore of Indian equity. The size limit was raised from ₹25,000 crore in March 2025.
Ideas being considered include a minimum shareholding threshold below which a concentrated FPI need not make the disclosures, and exemptions for funds investing mainly in professionally managed companies with no identified promoter, possibly including public sector undertakings.
SEBI's aim is to keep market transparency while removing compliance burdens that may push genuine foreign funds to sell shares only to escape the rules. Earlier in 2026, SEBI was also reported to be reviewing whether FPIs could hold a single Indian stock instead of the current minimum of three.
No change is final yet. Details are expected in a consultation paper inviting public comments.
Beneficial Ownership as a Regulatory Concept
A beneficial owner is the real human being who finally owns, controls or benefits from a company, fund or trust, even if their name does not appear on its official papers. On paper, a company may be owned by another company, which is owned by a trust, which is owned by yet another company. Beneficial ownership rules ask: who is the actual person at the end of this chain? Laws in India and around the world require companies, banks and investors to find and report this person.
SEBI's 2023 framework is India's strictest application of the beneficial ownership idea to foreign investors. The proposals under review keep the idea but narrow its reach, so that full look-through disclosure targets the cases where hidden ownership could actually break rules, such as promoter-linked holdings, and spares lower-risk holdings.
Foreign Portfolio Investment (FPI): How Foreign Money Flows Into Indian Markets
Foreign Portfolio Investment is money that foreign investors put into Indian financial assets like shares, government bonds and corporate bonds, mainly to earn returns, not to run the company. Because FPIs can buy and sell quickly, their money can come in fast and leave fast, which moves share prices and the rupee. In India, FPIs register with SEBI through a Designated Depository Participant under the SEBI (Foreign Portfolio Investors) Regulations, 2019.
Easing the extra disclosures would lower compliance costs for many FPIs, which SEBI hopes will make India a smoother destination for foreign portfolio money while keeping the checks against hidden ownership.
- Regulator: Securities and Exchange Board of India (SEBI), set up in 1988, statutory powers under the SEBI Act, 1992
- Additional FPI disclosure framework: introduced August 2023; effective 1 November 2023
- Triggers: over 50% of Indian equity AUM in a single corporate group, or over ₹50,000 crore Indian equity AUM
- Size threshold raised from ₹25,000 crore to ₹50,000 crore: SEBI board decision, 24 March 2025
- Proposals under consideration: a minimum shareholding threshold; exemptions for holdings in companies with no identified promoter, possibly including PSUs
- Status: under consideration; consultation paper awaited