Sebi releases framework for FPIs whose registration has expired to let go off frozen securities

A framework for foreign portfolio investors (FPIs) who’s regulatory registration has expired to dispose their securities has been released by the market regulator.

The press release read, “FPI registrations that expire due to non-payment of registration fee, shall now be permitted to be reactivated within 30 days from such expiry. Such FPIs shall also be permitted to dispose of their securities holdings during these 30 days. Further, in cases where the FPI chooses not to reactivate its registration within 30 days, it shall be permitted 180 days for disposal of its securities.”

In the event that the home jurisdiction of the FPI experiences an adverse change in compliance status, a minimum of 180 days or the end of the registration block will be allowed for the disposal of securities.

If, even after the allotted 180 days have passed and the securities owned by an FPI have not been sold, the following rules will take effect:

• The FPIs will have an extra 180 days to dispose of their securities, subject to a financial disincentive of 5% of sale proceeds, which will be credited to SEBI’s Investor Protection and Education Fund (IPEF) by the custodian. Any securities that are still unsold at the end of the extra 180 days will be considered to have been written off by the FPI in an obligatory maSEBI nner.
• In the event that securities are found in the accounts of FPIs whose registration has expired, the FPIs will have a single 360-day window to dispose of the securities (180-days without any financial incentives and an additional 180 days with a 5% financial disincentive) in these cases.
• Written-off securities will be placed in an escrow account managed by a broker who has been embanelled by the exchange. The broker will try to sell the assets at the going rate until they are sold. The sale’s revenues will be deposited into the SEBI’s IPEF.