SEBI Board Decisions – Good And Not So Good

Identification of ultimate beneficiary under p-note has always been a challenge for market regulator since the framing of SEBI (FII) Regulations in 1995. From time to time, SEBI has been tweaking with the rules of game to enhance the disclosure and reporting requirements in this regard but till date the existing regulations have failed to yield the desired results. The recent decision of the SEBI Board is in response to recommendations of Special Investigation Team (SIT) set up by the Hon'ble Supreme Court to trace out black money. The SIT had expressed concern with regard to identification of beneficial owners and transferability of p-notes. SEBI has therefore now proposed that all FIIs shall uniformly comply with SEBI prescribed KYC norms (irrespective of the jurisdiction of issuance of p-note or jurisdiction of beneficiaries of such p-note) and they will give detailed periodical reports. These measures are likely to result in more transparency and positive impact on