In terms of the Securities and Exchange Board of India’s (SEBI) circular dated August 1, 2024 (SEBI Circular), amendments have been made to the master circular for foreign portfolio investors (FPIs), designated depository participants (DDPs) and eligible foreign investors dated May 30, 2024 (Master Circular) granting exemption to university funds and university related endowments registered or eligible for registration as Category-I FPIs from the requirement of disclosing granular details of all entities (including individuals) holding ownership, economic interest or exercising control in the FPI, on a full look through basis, without any thresholds.
Category-I FPIs operating as university funds and university related endowments can avail the aforesaid exemption from undertaking additional disclosures on fulfilling the following conditions:
- Indian equity assets under management (AUM) of the FPI are less than 25% of its global assets under management;
- AUM held globally by the FPI should at least be INR 10,000 crore equivalent; and
- appropriate tax returns have been filed with the relevant authorities in its home jurisdiction evidencing that the entity is a non-profit organization entitled to tax exemptions.
The jurisdictions which will be eligible for availing exemptions granted to Category-I FPIs operating as university funds and university related endowments in terms of the SEBI Circular will be specified by SEBI, from time to time, in consultation with pilot custodians and DDPs standards setting forum through standard operating procedure framed under the Master Circular.
Conclusion
Only well-funded and diversified FPIs operating as university funds and endowments would be entitled to avail exemptions related to making granular disclosures to prevent misuse by smaller or non-diversified FPIs which may be established as university endowment funds in jurisdictions with lighter disclosure regimes.