Key Points
The lower threshold can be a challenge for ultimate beneficiaries as lowering ownership below 10 per cent in a fund could mean losing control over the entity..
Bad actors and overseas investors who fiercely guard their privacy will have to change tack while bankers servicing thousands of offshore funds will have to scan a mountain of investor data with India tightening its anti-money laundering rules this week to figure out the faces behind the foreign portfolio investors (FPIs) trading on stock exchanges here...
With this, an FPI will have to reveal the identities of all ultimate investors owning or having a share of 10% or more in the fund to their custodian banks who, in turn, will periodically share the information with the Securities & Exchange Board of India (Sebi)...
There are more than 11,000 FPIs registered with Sebi, and custodian banks (which hold the money and stocks of FPIs and conduct their KYC formalities) are inundated with questions from overseas clients who want to know: How soon one must share the BO and other information?.
However, since Sebi seems to have asked custodians to share the UBOs of FPI clients by September, they would now have to reassess the UBOs as per the 10% threshold," said Prakhar Dua, leader, financial services and regulatory practice, Nishith Desai Associates...
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